þ
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended
September 30, 2006
or
¨
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from
to

Commission File Number: 1-9247

CA, Inc.

(Exact name of registrant as specified in its charter)

Delaware

13-2857434

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification Number)

One CA Plaza

Islandia, New York

11749

(Address of principal executive offices)

(Zip Code)

(631) 342-6000
(Registrants telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file such reports), and (2) has been
subject to the filing requirements for at least the past 90 days: Yes
þ
No
¨
.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer
þ
Accelerated filer
¨
Non-accelerated filer
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act): Yes
¨
No
þ
.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date:

We have reviewed the accompanying consolidated condensed balance sheet of CA, Inc. and subsidiaries
as of September 30, 2006, the related consolidated condensed statements of operations for the
three-month and six-month periods ended September 30, 2006 and 2005, and the consolidated condensed
statements of cash flows for the six-month periods ended September 30, 2006 and 2005. These
consolidated condensed financial statements are the responsibility of the Companys management.

We conducted our review in accordance with standards established by the Public Company Accounting
Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United States), the objective of
which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the
consolidated condensed financial statements referred to above for them to be in conformity with
U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards established by the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet of CA, Inc. and
subsidiaries as of March 31, 2006, and the related consolidated statements of operations,
stockholders equity, and cash flows for the year then ended (not presented herein); and in our
report dated July 31, 2006, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying consolidated condensed
balance sheet as of March 31, 2006, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.

As discussed in Note A to the consolidated condensed financial statements, the Company has restated
the consolidated condensed statements of operations for the three-month and six-month periods ended
September 30, 2005 and the consolidated condensed statement of cash flows for the six-month period
ended September 30, 2005 to reflect the effects of certain prior period restatements that were
previously disclosed in Note 12 of the consolidated financial statements in the Companys Form 10-K
for the fiscal year ended March 31, 2006.

The accompanying unaudited Consolidated Condensed Financial Statements of CA, Inc. and subsidiaries
(the Company) have been prepared in accordance with U.S. generally accepted accounting principles
(GAAP) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All such adjustments are of a normal recurring nature.

The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Although these estimates are based on managements knowledge of current events
and actions it may undertake in the future, these estimates may ultimately differ from actual
results.

Operating results for the three and six-month periods ended September 30, 2006 are not necessarily
indicative of the results that may be expected for the fiscal year ending March 31, 2007. For
further information, refer to the Companys Consolidated Financial Statements and Notes thereto
included in the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2006.

The Consolidated Condensed Statements of Operations for the three and six-month periods ended
September 30, 2005 and the Consolidated Condensed Statement of Cash Flows for the six month period
ended September 30, 2005, included in this Form 10-Q have been restated to reflect the effects of
certain prior period restatements that were previously disclosed in Note 12 of the Consolidated
Financial Statements in the Companys Annual Report on Form 10-K for the fiscal year ended March
31, 2006.

The following tables summarize the Consolidated Statements of Operations and Cash Flows for the
periods indicated, giving effect to the restatement adjustments described above. Quarterly
information presented below is unaudited.

FISCAL YEAR 2006 UNAUDITED QUARTERLY STATEMENT OF OPERATIONS DATA

For the Three Months

For the Six Months

Ended September 30, 2005

Ended September 30, 2005

Previously

Previously

Reported
(1)

Restated

Reported
(1)

Restated

(unaudited)

(in millions, except per share data)

Subscription revenue

$

696

$

704

$

1,391

$

1,406

Total revenue

942

950

1,862

1,877

Selling, general, and administrative

382

383

770

772

Product development and enhancements

179

179

350

351

Total expenses before interest and taxes

892

893

1,717

1,720

Income before interest and taxes

50

57

145

157

Income before income taxes

40

47

126

138

Income tax (benefit) expense

(1

)

1

(9

)

(5

)

Net income

41

46

135

143

Basic income per share

0.07

0.08

0.23

0.24

Diluted income per share

0.07

0.08

0.23

0.24

(1)

As reported in the Companys Form 10-Q for the period ended September 30, 2005

As reported in the Companys Form 10-Q for the period ended September 30, 2005

Reclassifications
and other adjustments:
Certain prior year balances have been reclassified to conform
with the current periods presentation.

Approximately $134 million of current liabilities that were components of Accounts payable at
March 31, 2006 have been reclassified to Accrued expenses and other current liabilities on the
Consolidated Condensed Balance Sheet to conform to the September 30, 2006 presentation.

Approximately $5 million of capital lease obligations that were components of Accrued expenses and
other current liabilities at March 31, 2006 have been reclassified accordingly between Current
portion of long-term debt and loans payable and Long-term debt, net of current portion on the
Consolidated Condensed Balance Sheet to conform to the September 30, 2006 presentation.

Approximately $32 million of deferred tax assets that were offset against Deferred income taxes 
long term liabilities at March 31, 2006 have been reclassified to Deferred income taxes 
current assets on the Consolidated Condensed Balance Sheet to conform to the September 30, 2006
presentation.

Subsequent to the filing of the Companys Annual Report on Form 10-K for the fiscal year ended
March 31, 2006, the Company determined that deferred tax assets associated with certain outstanding
stock options were understated by approximately $47 million through an $8 million understatement in
Deferred income taxes  current assets and a $39 million overstatement in deferred income taxes
 noncurrent liabilities on the Consolidated Balance Sheet as of March 31, 2006.
Correspondingly, Additional paid in capital was understated by $47 million on the Consolidated
Balance Sheet and Statement of Stockholders Equity as of and
for the year ended March 31, 2006. This error has been corrected on the Consolidated
Condensed Balance Sheet as of March 31, 2006 in this Quarterly Report on Form 10-Q. The impact of
this correction on the effected line items is not considered material to the March 31, 2006
financial statements and does not effect the previously reported
Consolidated Statements of Operations or Cash Flows for any prior
periods.

Basis of Revenue Recognition:
The Company generates revenue from the following primary sources: (1)
licensing software products; (2) providing customer technical support (referred to as maintenance);
and (3) providing professional services, such as consulting and education.

The Company recognizes revenue pursuant to the requirements of Statement of Position (SOP) 97-2,
Software Revenue Recognition, issued by the American Institute of Certified Public Accountants,
as amended by SOP 98-9 Modification of SOP 97-2, Software Revenue Recognition, With Respect to
Certain Transactions. In accordance with SOP 97-2, the Company begins to recognize revenue from
licensing and supporting its software products when all of the following criteria are met: (1) the
Company has evidence of an arrangement with a customer; (2) the Company delivers the products; (3)
license agreement terms are deemed fixed or determinable and free of contingencies or uncertainties
that may alter the agreement such that it may not be complete and final; and (4) collection is
probable.

Under the Companys business model, software license agreements include flexible contractual
provisions that, among other things, allow customers to receive unspecified future software
products for no additional fee. These agreements combine the right to use the software products
with maintenance for the term of the agreement. Under these agreements, once all four of the above
noted revenue recognition criteria are met, the Company is required to recognize revenue ratably
over the term of the license agreement. For license agreements signed prior to October 2000 (the
prior business model), once all four of the above noted revenue recognition criteria were met,
software license fees were recognized as revenue up-front, and the maintenance fees were deferred
and subsequently recognized as revenue over the term of the license. New deferred subscription
value related to acquisitions is initially recorded on the acquired companys systems generally
under a perpetual or up-front software license agreement model, and
is typically converted to our ratable software license agreement model within the
first fiscal year after the acquisition. As these contracts are renewed under our business model,
revenue is recognized ratably as subscription revenue on a monthly basis over the term of the
agreement.

Revenue from professional service arrangements is generally recognized as the services are
performed. Revenues from committed professional services arrangements that are sold as part of a
software transaction are deferred and recognized on a ratable basis over the life of the related
software transaction. If it is not probable that a project will be completed or the payment will be
received, revenue is deferred until the uncertainty is removed.

Revenue from sales to distributors, resellers, and value-added resellers (VARs) is recognized when
all four of the SOP 97-2 revenue recognition criteria noted above are met and when these entities
sell the software product to their customers. This is commonly referred to as the sell-through
method. Beginning July 1, 2004, a majority of sales of products to distributors, resellers and
VARs incorporate the right for the end-users to receive certain unspecified future software
products and revenue from those contracts is therefore recognized on a ratable basis.

For further information, refer to the Companys Consolidated Financial Statements and Notes thereto
included in the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2006.

Cash Dividends:
In September 2006, the Companys Board of Directors declared a quarterly
cash dividend of $0.04 per share. The dividend totaled approximately $23 million and was paid on
September 29, 2006 to stockholders of record on September 22, 2006. In June 2006, the Companys
Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled
approximately $23 million and was paid on June 30, 2006 to stockholders of record on June 19, 2006.

In August 2005, the Companys Board of Directors declared a quarterly cash dividend of $0.04 per
share. The dividend totaled approximately $23 million and was paid on September 30, 2005 to
stockholders of record on September 16, 2005. In May 2005, the Companys Board of Directors
declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $24
million and was paid on June 30, 2005 to stockholders of record on June 15, 2005.

Statements of Cash Flows:
For the six-month periods ended September 30, 2006 and 2005,
interest payments were $44 million and $71 million, respectively, and income taxes paid were $158
million and $127 million, respectively. The decrease in interest paid is a result of the timing of
payments on the Companys outstanding debt.

On August 15, 2006, the Company entered into a purchase and sale agreement, pursuant to which the
Company sold its corporate headquarters located in Islandia, New York with a net book value of $194
million for approximately $201 million in net cash proceeds. In connection with the sale of the
building, the Company entered into a 15 year lease agreement for its corporate headquarters with
renewal options for an additional twenty years. The Company is responsible for paying real estate
taxes and operating expenses, as well as any capital expenditures required to maintain the premises
in good condition and repair and in compliance with applicable laws. The Company concluded that
the sale of its corporate headquarters qualifies for sale-leaseback and operating lease accounting
treatment. Accordingly, the
Company deferred and will amortize a gain of approximately $7 million as a reduction to rent
expense on a straight-line basis over the initial lease term of fifteen years.

Future minimum lease payments to be made under this non-cancelable operating lease as of September
30, 2006 are as follows:

Fiscal Years

(in millions)

Remainder of fiscal year 2007

$

8

2008

15

2009

15

2010

15

2011

16

2012

16

And thereafter

152

Total minimum lease payments

$

237

Total rent expense related to this lease arrangement during the three-months ended September 30,
2006 was approximately $2 million.

On August 15, 2006, the Company announced the commencement of a tender offer to purchase
outstanding shares of CA common stock, at a price not less than $22.50 and not greater than $24.50
per share. This tender offer represented the initial phase of the $2 billion stock repurchase plan
that the Company announced in June 2006, which replaced the prior $600 million common stock
repurchase plan. In the tender offer, CA offered to purchase for cash up to 40,816,327 shares of
its common stock, par value $0.10 per share, including the Associated Rights to Purchase Series One
Junior Participating Preferred Stock, Class A at a per share purchase price of not less than $22.50
nor greater than $24.50, net to the seller in cash, without interest. The tender offer also allowed
CA the right to purchase up to 11,345,647 additional shares without amending or extending the
offer.

On September 14, 2006, the expiration date of the tender offer, CA purchased 41,225,515 shares at a
purchase price of $24.00 per share, for a total price of approximately $989 million, which excludes
bank, legal and other associated charges of approximately $2 million. Upon completion of the
tender offer, the Company retired all the shares that were purchased, which resulted in a reduction
of the common stock issued and outstanding as reflected in the Companys stockholders equity on
the Consolidated Condensed Balance Sheet at September 30, 2006. A total of $750 million was drawn down from
the 2004 Revolving Credit Facility in September 2006 in order to finance a portion of the tender
offer. The Companys current borrowing rate is 6.54%. The maximum committed amount available under
the revolving credit facility (the 2004 Revolving Credit Facility) is $1 billion, exclusive of
incremental credit increases of up to an additional $250 million which are available subject to
certain conditions and the agreement of the Companys lenders. Total interest expense relating to
the borrowing was less than $1 million through September 30, 2006.

In September 2006, the Company entered into a capital lease obligation of $21 million consisting of
a sale-leaseback of previously owned assets for cash proceeds of $15 million and new assets with a
value of $6 million.

In September 2006, the Company sold its investment in marketable securities and received net cash
proceeds of approximately $32 million. The transaction resulted in a gain of approximately $14
million, which has been recorded in the Other gains, net line item of the Consolidated Condensed
Statement of Operations for the three and six-month periods ending September 30, 2006.

Derivatives
:
Derivatives are accounted for in accordance with GAAP and Statement of
Financial Accounting Standards (SFAS) No. 133, 
Accounting for Derivative Instruments and Hedging
Activities
 (FAS 133). During the quarter ended September 30, 2006, the Company entered into
derivative contracts with a total notional value of approximately 23 million euros, none
of which were outstanding as of September 30, 2006. The Company entered into
these contracts with the intent of mitigating a certain portion of the Companys euro operating
exposure as part of the Companys on-going

risk management program. These contracts did not qualify for hedge accounting treatment under FAS
133 and did not result in any significant gains or losses for the quarter.

NOTE B  COMPREHENSIVE INCOME

Comprehensive income includes unrealized gains and losses on the Companys available-for-sale
securities, net of related taxes, and foreign currency translation adjustments. The components of
comprehensive income for the three and six-month periods ended September 30, 2006 and 2005 are as
follows:

For the Three Months

For the Six Months

Ended September 30,

Ended September 30,

2006

2005

2006

2005

(restated)

(restated)

(in millions)

Net income

$

53

$

46

$

88

$

143

Reversal of prior period unrealized gains
on marketable securities, net of tax

(2

)



(2

)



Foreign currency translation adjustments

(9

)

(10

)



(53

)

Total comprehensive income

$

42

$

36

$

86

$

90

NOTE C  EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of
common shares outstanding for the period. Diluted earnings per share is computed by dividing (i)
the sum of net income and the after-tax amount of interest expense recognized in the period
associated with outstanding, dilutive Convertible Senior Notes by (ii) the sum of the weighted
average number of common shares outstanding for the period and dilutive common share equivalents.

For the three months ended September 30, 2006 and 2005, approximately 19.7 million and 12.0 million options to purchase common stock,
respectively, were excluded from the calculation, as the exercise prices were greater than the average market price of the common stock during the
respective periods. For the six months ended September 30, 2006 and 2005, approximately 19.6 million and 12.0 million options to
purchase common stock, respectively were excluded from the calculation, as the exercise prices were greater than the average market price of the
common stock during the respective periods.

Effective April 1, 2005, the Company adopted, under the modified retrospective basis, the
provisions of Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004),

Share-Based Payment
, (SFAS No. 123(R)) which establishes accounting for share-based awards
exchanged for employee services. Under the provisions of SFAS No. 123(R), share-based compensation
cost is measured at the grant date, based on the fair value of the award, and is recognized as an
expense over the employees requisite service period (generally the vesting period of the award).

The Company recognized share-based compensation in the following line items on the Consolidated
Condensed Statements of Operations for the periods indicated:

For the Three Months

For the Six Months

Ended September 30,

Ended September 30,

2006

2005

2006

2005

(restated)

(restated)

(in millions)

Cost of professional services

$

1

$

1

$

2

$

2

Selling, general, and administrative

17

17

30

37

Product development and enhancements

7

9

12

19

Share-based compensation expense before tax

25

27

44

58

Income tax benefit

7

7

12

15

Net compensation expense

$

18

$

20

$

32

$

43

The decrease in share-based compensation expense for the six-month period ended September 30, 2006,
as compared with the corresponding prior year period was principally the result of (1) awards
granted in July 2000 becoming fully amortized in the first half of fiscal year 2006, (2) a decrease
in expense for performance-based stock units resulting from a decrease in the Companys anticipated
payout percentages and (3) an increase in the Companys estimated forfeiture rate of share-based
awards based on historical experience.

Total unrecognized compensation costs related to non-vested awards, expected to be recognized over
a weighted average period of 1.6 years, amounted to $141 million at September 30, 2006.

There were no capitalized share-based compensation costs at September 30, 2006 or 2005.

Share-based incentive awards are provided to employees under the terms of the Companys equity
compensation plans (the Plans). The Plans are administered by the Compensation and Human Resource
Committee of the Board of Directors (the Committee). Awards under the Plans may include
at-the-money stock options, premium-priced stock options, restricted stock awards (RSAs),
restricted stock units (RSUs), performance share units (PSUs), or any combination thereof. The
non-employee members of the Companys Board of Directors also receive deferred stock units under a
separate director compensation plan.

RSAs are stock awards issued to employees that are subject to specified restrictions and a risk of
forfeiture. The restrictions typically lapse over a two or three year period. The fair value of
the awards is determined and fixed based on the Companys stock price on the grant date.

RSUs are stock awards that are issued to employees that entitle the holder to receive shares of
common stock as the awards vest, typically over a two- or three-year period. The fair value of the
awards is determined and fixed based on the Companys stock price on the grant date, except that
for RSUs not entitled to dividend equivalents, the fair value is reduced by the present value of
the expected dividend stream during the vesting period, which is calculated using the risk-free
interest rate.

PSUs are awards issued under the long-term incentive plan for senior executives where the number of
shares ultimately granted to the employee depends on Company performance measured against specified
targets and is determined after a one-year or three-year period as applicable, the 1-year and
3-year PSUs, respectively. The fair value of each award is estimated on the date that the
performance targets are established based on the fair value of the Companys stock, adjusted for
dividends as described above for RSUs, and the Companys

estimate of the level of achievement of its performance targets as described below. The Company is
required to recalculate the fair value of issued PSUs each reporting period until they are granted,
as defined in SFAS No. 123(R). The adjustment is based on the fair value of the Companys stock on
the reporting period date, adjusted for dividends as described above for RSUs.

Stock options are awards which allow the employee to purchase shares of the Companys stock at a
fixed price. Beginning in fiscal year 2002, stock options are granted at an exercise price equal
to or greater than the Companys stock price on the date of grant. Awards granted after fiscal
year 2001 generally vest one-third per year, become fully vested two or three years from the grant
date and have a contractual term of ten years.

Additional information relating to the Plans, all of which have been approved by stockholders, are
discussed in more detail in Note 9 of the Consolidated Financial Statements included in the
Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2006.

Under the Companys long-term incentive program for fiscal year 2007, which is more fully described
in a Current Report on Form 8-K dated June 26, 2006, senior executives were granted stock options
and issued PSUs, under which the senior executives are eligible to receive RSAs or RSUs and
unrestricted shares in the future if certain performance targets are achieved. Each quarter, the
Company compares the performance the Company expects to achieve with the performance targets. Upon
completion of the requisite performance period, the actual number of shares granted is subject to
the approval of the Committee. As of September 30, 2006, the Company has accrued compensation cost
based on its current expectation of achievement of approximately 35% and 100% for the 1-year and
3-year PSU awards, respectively. Compensation cost will continue to be amortized over the
requisite service period of the awards. At the conclusion of the performance periods for the
fiscal year 2007 1-year and 3-year PSUs, the applicable number of shares of RSAs, RSUs or
unrestricted stock granted may vary based upon the level of achievement of the performance targets
and the approval of the Committee. The related compensation cost recognized will be based on the
number of shares granted.

Under the Companys long-term incentive plan for fiscal year 2006, senior executives were granted
stock options and issued PSUs, under which the senior executives are eligible to receive RSAs or
RSUs and unrestricted shares in the future if certain performance targets are achieved. In the
first quarter of fiscal year 2007, the Company granted 0.3 million RSAs under the 1-year PSU with a
weighted average grant date fair value of $21.88. The 3-year PSUs have not yet been granted.
Consequently, each quarter, the Company compares the performance the Company expects to achieve
with the performance targets for the 3-year PSUs. Upon completion of the requisite performance
period, the actual number of shares granted is subject to the approval of the Committee. As of
September 30, 2006, the Company has accrued compensation cost based on its current expectation of
achievement of approximately 40% of the 3-year PSU awards under the long-term incentive plan.
Compensation cost for both the 1-year and 3-year awards will continue to be amortized over the
requisite service period of the awards. At the conclusion of the performance period for the 3-year
PSUs, the number of shares of unrestricted stock issued may vary based upon the level of
achievement of the performance targets and the approval of the Committee. The related compensation
cost recognized will be based on the number of shares granted.

The Company estimates the fair value of stock options using the Black-Scholes valuation model,
consistent with the provisions of SFAS No. 123(R). Key input assumptions used to estimate the fair
value of stock options include the grant price of the award, the expected option term, volatility
of the Companys stock, the risk-free interest rate, and the Companys dividend yield. The Company
believes that the valuation technique and the approach utilized to develop the underlying
assumptions are appropriate in calculating the fair values of the Companys stock options granted
in the six month periods ended September 30, 2006 and 2005. Estimates of fair value are not
intended to predict actual future events or the value ultimately realized by employees who receive
equity awards.

For the quarter ended September 30, 2006 and 2005, the Company issued options covering
approximately 2.0 million and 0.1 million shares of common stock, respectively. The weighted
average grant date fair value of these grants was $8.34 and $14.91, respectively.

For the six-month periods ended September 30, 2006 and 2005, the Company issued options covering
2.4 million and 2.6 million shares of common stock, respectively. The weighted average fair value
at the date of grant for options granted during the six-month periods ended September 30, 2006 and
2005 was $8.39 and $15.05, respectively. The weighted average assumptions that were used for
option grants in the respective periods are as follows:

For the Three Months

For the Six Months

Ended September 30,

Ended September 30,

2006

2005

2006

2005

Dividend yield

0.73

%

0.58

%

0.73

%

0.57

%

Expected volatility factor
(1)

0.41

0.56

0.41

0.56

Risk-free interest rate
(2)

4.9

%

4.1

%

4.9

%

4.1

%

Expected term (in years)
(3)

4.5

6.0

4.5

6.0

(1)

Measured using historical daily price changes of the Companys
stock over the respective expected term of the options and the
implied volatility derived from the market prices of the Companys
options traded by third parties.

(2)

The risk-free rate for periods within the contractual term of the
share options is based on the U.S. Treasury yield curve in effect
at the time of grant.

(3)

The expected term is the number of years that the Company
estimates, based primarily on historical experience, that options
will be outstanding prior to exercise. The decrease in the
expected term in fiscal year 2007 as compared with fiscal year
2006, was primarily due to the exclusion of employee exercise
behavior related to grants authorized prior to fiscal year 1997,
which expired prior to fiscal year 2007, in estimating the expected
term in fiscal year 2007.

For the fiscal year 2007 grants, the Company changed its compensation structure toward a
greater use of RSAs and a lesser use of RSUs.

For the quarter ended September 30, 2006, the Company
issued RSUs covering less than 0.1 million shares of
common stock with a weighted average grant date fair value of $23.28. For the quarter
ended September 30, 2005, the Company did not issue RSUs.

For the six-month periods ended September 30, 2006 and 2005, the Company issued RSUs covering 0.3
million and 1.8 million shares of common stock, respectively. The weighted average grant date fair
value of these grants was $21.97 and $27.00, respectively.

For the quarters ended September 30, 2006 and 2005,
the Company issued RSAs covering 0.2 million and less than 0.1 million shares of common stock, respectively.
The weighted average grant date fair value of these grants was $22.74 and $27.69, respectively.

For the
six-month periods ended September 30, 2006 and 2005, the Company issued RSAs covering 2.9
million and 0.3 million shares of common stock, respectively. The weighted average grant date fair
value of these grants was $21.98 and $27.29, respectively. The RSAs
granted for the six month period ended September 30,
2006 include the 0.3 million RSAs granted under the
fiscal year 2006 1-year PSU in the first quarter of fiscal
year 2007.

The Company maintains a Year 2000 Employee Stock Purchase Plan (the Purchase Plan) for all eligible
employees. Consistent with the provisions of SFAS No. 123, the Purchase Plan under SFAS No. 123(R)
is considered compensatory. The estimated fair value of the stock purchase rights under the
Purchase Plan for the six-month offer periods commencing July 1, 2006 and July 1, 2005 was $4.38
and $5.76, respectively. The fair value is estimated on the first date of the offering period
using the Black-Scholes option pricing model. The weighted average assumptions that were used in
determining the estimated fair value of stock purchase rights under the Purchase Plan are as
follows:

The Company uses installment license agreements as a standard business practice and has a history
of successfully collecting substantially all amounts due under the original payment terms without
making concessions on payments, software products, maintenance, or professional services. Net trade
and installment accounts receivable represent financial assets derived from the committed amounts
due from the Companys customers that have been earned by the Company. These accounts receivable
balances are reflected net of unamortized discounts based on imputed interest for the time value of
money for license agreements under our prior business model, unearned revenue attributable to
maintenance, unearned professional services contracted for in the license agreement, and allowances
for doubtful accounts. These balances do not include unbilled contractual commitments executed
under the Companys current business model. Such committed amounts are summarized in Managements
Discussion and Analysis of Financial Condition and Results of Operations. Trade and installment
accounts receivable are comprised of the following components:

In the tables below, capitalized software includes both purchased and internally developed software
costs; other identified intangible assets includes both purchased customer relationships and
trademarks/trade name costs. Internally developed capitalized software costs and other identified
intangible asset costs are included in Other noncurrent assets on the Consolidated Condensed
Balance Sheets.

The gross carrying amounts and accumulated amortization for identified intangible assets are as
follows:

At September 30, 2006

Gross

Accumulated

Net

Assets

Amortization

Assets

(in millions)

Capitalized software:

Purchased

$

4,805

$

4,462

$

343

Internally developed

589

388

201

Other identified intangible assets subject to amortization

657

293

364

Other identified intangible assets not subject to
amortization

26



26

Total

$

6,077

$

5,143

$

934

At March 31, 2006

Gross

Accumulated

Net

Assets

Amortization

Assets

(in millions)

Capitalized software:

Purchased

$

4,760

$

4,299

$

461

Internally developed

558

363

195

Other identified intangible assets subject to amortization

628

266

362

Other identified intangible assets not subject to
amortization

26



26

Total

$

5,972

$

4,928

$

1,044

In connection with the Companys fiscal year 2007 acquisitions, the Company recognized a total of
approximately $45 million and $29 million of purchased software and other identified intangible
assets subject to amortization, respectively for the first half of fiscal year 2007. Refer to Note
G, Acquisitions, for additional information relating to the Companys fiscal year 2007
acquisitions.

In the second quarter of fiscal years 2007 and 2006, amortization of capitalized software costs was
$83 million and $111 million, respectively, and amortization of other identified intangible assets
was $14 million and $12 million, respectively.

For the first six months of fiscal years 2007 and 2006, amortization of capitalized software costs
was $188 million and $224 million, respectively, and amortization of other identified intangible
assets was $27 million and $23 million, respectively.

Based on the identified intangible assets recorded through September 30, 2006, annual amortization
expense is expected to be as follows:

The carrying value of goodwill was $5.40 billion and $5.31 billion as of September 30, 2006 and
March 31, 2006, respectively. During the six-month period ended September 30, 2006, goodwill
increased by approximately $131 million as a result of fiscal year 2007 acquisitions, which was
partially offset by approximately $38 million of goodwill adjustments for prior year acquisitions.
The goodwill adjustment for the first six months of fiscal year 2007 primarily consisted of a $20
million favorable resolution to certain foreign tax credits that were acquired and fully reserved
that resulted from the conclusion of an Internal Revenue Service
audit and approximately $11
million related to other adjustments to deferred tax assets and liabilities associated with
acquired businesses. Refer to Note G, Acquisitions, for additional information relating to the
Companys 2007 fiscal year acquisitions.

NOTE G  ACQUISITIONS

During the first half of fiscal year 2007, the Company acquired the following companies:

Cendura, a privately held provider of IT service management service delivery solutions.

The total cost of these acquisitions was approximately $173 million, net of approximately $20
million of cash and cash equivalents acquired and excluding a holdback of approximately $9 million.

The acquisitions of Cybermation, MDY, XOsoft and Cendura were accounted for as purchases and
accordingly, their results of operations have been included in the Consolidated Condensed Financial
Statements since the dates of their acquisitions. The Company recorded approximately a $10 million
charge for in-process research and development costs associated with the acquisition of XOsoft
during the second quarter of fiscal year 2007. Total goodwill recognized in these transactions
amounted to approximately $131 million. The allocation of a significant portion of the purchase
price to goodwill was predominantly due to the relatively short lives of the developed technology
assets, whereby a substantial amount of the purchase price was based on anticipated earnings beyond
the estimated lives of the intangible assets. The 2007 fiscal year acquisitions included net
deferred tax liabilities of approximately $26 million.

The purchase price allocations for Cybermation, MDY, XOsoft and Cendura are based upon estimates
which may be revised within one year of the date of acquisition as additional information becomes
available. It is anticipated that the final purchase price allocation for these acquisitions will
not differ materially from their preliminary allocations.

At
September 30, 2006, the Company had approximately $49 million in
remaining holdback payments related to the acquisitions of Wily,
XOsoft, and Cendura, which were included in the Accrued
expenses and other liabilities line on the Consolidatd Condensed Balance
Sheet. During the six months ended September 30, 2006, the Company
made payments against these liabilities of approximately $5 million
and the remaining balances are expected to be paid within the next twelve months.

Accrued acquisition-related costs and changes in these accruals, including additions related to the
Companys acquisitions of Cybermation, MDY, XOsoft, Cendura and prior year acquisitions were as
follows:

Duplicate

Facilities &

Employee

Other Costs

Costs

(in millions)

Balance at March 31, 2006

$

60

$

7

Additions

1

2

Settlements

(7

)

(4

)

Adjustments

(21

)

(1

)

Balance at September 30, 2006

$

33

$

4

The liabilities for duplicate facilities and other costs relate to operating leases, which are
actively being renegotiated and expire at various times through 2010, negotiated buyouts of the
operating lease

commitments, and other contractual liabilities. The liabilities for employee costs relate to
involuntary termination benefits. Adjustments to the corresponding liability and related goodwill
accounts are recorded when obligations are settled at amounts more or less than those originally
estimated. The remaining liability balances are included in the Accrued expenses and other current
liabilities line item on the Consolidated Condensed Balance Sheets.

NOTE H  RESTRUCTURING AND OTHER

Restructuring Plans

In August 2006, the Company announced a cost reduction and restructuring plan (the fiscal 2007
plan) to significantly improve the Companys expense structure and increase its competitiveness.
The total cost of the restructuring plan is currently expected to be approximately $150 million,
most of which is expected to be recognized in fiscal year 2007. The majority of the actions are expected to
be completed by late fiscal year 2008. The fiscal 2007 plans objectives include a workforce
reduction, global facilities consolidations and other cost reduction initiatives. The Company
currently estimates a reduction in workforce of approximately 1,400 individuals under the fiscal
2007 plan, including approximately 300 positions associated with joint ventures. The termination
benefits the Company has offered in connection with this workforce reduction are substantially the
same as the benefits the Company has provided historically for non-performance-based workforce
reductions, and in certain countries have been provided based upon prior experiences with the
restructuring plan announced in July 2005 (the fiscal 2006 plan) as described below. These costs
have been recognized in accordance with SFAS No. 112, 
Employers Accounting for Post Employment
Benefits, an Amendment of FASB Statements No. 5 and 43
 (SFAS No. 112). The Company incurred
approximately $39 million of severance costs in the second quarter of fiscal year 2007 relating to
approximately 750 individuals. The specific plans associated with the balance of the planned
reductions in workforce are still being finalized and the associated charges will be recorded once
the actions are approved by management. Facilities abandonment costs are expected to be incurred
beginning in the third quarter of fiscal year 2007; as such, no costs were recognized in the second
quarter of fiscal year 2007.

Accrued restructuring costs and changes in these accruals during the second quarter of fiscal year
2007 were as follows:

Severance

(in millions)

Additions

$

39

Payments

(11

)

Balance at September 30, 2006

$

28

The liability balance is included in the Accrued expenses and other current liabilities line item
on the Consolidated Condensed Balance Sheet at September 30, 2006.

In July 2005, the Company announced the fiscal 2006 plan to increase efficiency and productivity
and to more closely align its investments with strategic growth opportunities. The total cost of
the fiscal 2006 plan is expected to be approximately $100 million. The Company accounted for the
individual components of the restructuring plan as follows:

Severance
: The fiscal 2006 plan included a workforce reduction of approximately five percent, or
800 positions, worldwide. The termination benefits the Company offered in connection with this
workforce reduction were substantially the same as the benefits the Company has provided
historically for non-performance-based workforce reductions, and in certain countries have been
provided based upon statutory minimum requirements. The employee termination obligations incurred
in connection with the fiscal 2006 plan were accounted for in accordance with SFAS No. 112
.
In
certain countries, the Company elected to provide termination benefits in excess of legal
requirements subsequent to the initial implementation of the plan. These additional costs have
been recognized as incurred in accordance with SFAS No. 146. The

Company incurred approximately $18 million of severance costs during the first half of fiscal year
2007 and approximately $54 million since the fiscal 2006 plans inception. The Company anticipates
the severance portion of the fiscal 2006 plan will cost approximately $60 million and anticipates
that the remaining amount will be incurred by the end of fiscal year 2007. Final payment of these
amounts is dependent upon settlement with the works councils in certain international locations.

Facilities Abandonment
: The Company recorded the costs associated with lease termination and/or
abandonment when the Company ceased to utilize the leased property. Under SFAS No. 146, the
liability associated with lease termination and/or abandonment is measured as the present value of
the total remaining lease costs and associated operating costs, less probable sublease income. The
Company recovered approximately $1 million of facilities abandonment related costs during the first
half of fiscal year 2007, due to its ability to sublease certain properties, and incurred
approximately $29 million in net costs since the fiscal 2006 plans inception. The Company
accretes its obligations related to the facilities abandonment to the then-present value and,
accordingly, recognizes accretion expense as a restructuring expense in future periods. The
Company anticipates the facilities abandonment portion of the restructuring plan will cost up to a
total of $40 million, and anticipates that the remaining amount will be incurred by the end of
fiscal year 2007.

Accrued restructuring costs and changes in these accruals for the first half of fiscal year 2007
were as follows:

Facilities

Severance

Abandonment

(in millions)

Balance at March 31, 2006

$

18

$

27

Additions (reductions)

18

(1

)

Payments

(20

)

(6

)

Balance at September 30, 2006

$

16

$

20

The liability balance is included in the Accrued expenses and other current liabilities line item
on the Consolidated Condensed Balance Sheets.

Other:

During the first half of fiscal year 2007, the Company incurred approximately $3 million in
connection with certain DPA related costs (see also Note J, Commitments and Contingencies).
During the first half of fiscal year 2006, the Company incurred approximately $5 million associated
with the termination of a non-core application development professional services project and $3
million in connection with certain DPA related costs.

NOTE I  INCOME TAXES

Income tax expense (benefit) for the three and six-month periods ended September 30, 2006 was $13
million and $21 million, respectively, compared to the three and six-month periods ended September
30, 2005 of $1 million and $(5) million, respectively. For the quarter ended September 30, 2006,
the tax provision included a net benefit of approximately $10 million, primarily arising from the
resolution of certain state and international tax contingencies. For the six-month period ending
September 30, 2006, the tax provision included a net benefit of approximately $17 million,
primarily arising from the resolution of certain international and U.S. tax contingencies.

For the quarter ended September 30, 2005, the tax provision included a net benefit of approximately
$14 million, primarily arising from the conclusion of an international tax examination and the
reduction of a valuation allowance related to foreign net operating loss carry forwards. In
addition to the aforementioned $14 million benefit, the six-month period ended September 30, 2005
included a net benefit of approximately $36 million reflecting IRS Notice 2005-38. Notice 2005-38
permitted the utilization of foreign tax credits in

calculating the special one-time dividends received deduction on repatriating funds as provided by
the American Jobs Creation Act of 2004.

NOTE J  COMMITMENTS AND CONTINGENCIES

Certain legal proceedings in which we are involved are discussed in Note 7, Commitments and
Contingencies, in the Notes to the Consolidated Financial Statements included in our Annual Report
on Form 10-K for the fiscal year ended March 31, 2006 (the 2006 Form 10-K). The following
discussion should be read in conjunction with the 2006 Form 10-K.

Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004

The Company, its former Chairman and CEO Charles B. Wang, its former Chairman and CEO Sanjay Kumar,
its former Chief Financial Officer Ira Zar, and its Executive Vice President Russell M. Artzt were
defendants in one or more stockholder class action lawsuits, filed in July 1998, February 2002, and
March 2002 in the United States District Court for the Eastern District of New York (the Federal
Court), alleging, among other things, that a class consisting of all persons who purchased the
Companys common stock during the period from January 20, 1998 until July 22, 1998 were harmed by
misleading statements, misrepresentations, and omissions regarding the Companys future financial
performance. In addition, in May 2003, a class action lawsuit captioned
John A. Ambler v.
Computer Associates International, Inc., et al
. was filed in the Federal Court. The complaint
in this matter, a purported class action on behalf of the CA Savings Harvest Plan (the CASH Plan)
and the participants in, and beneficiaries of, the CASH Plan for a class period running from March
30, 1998, through May 30, 2003, asserted claims of breach of fiduciary duty under the federal
Employee Retirement Income Security Act (ERISA). The named defendants were the Company, the
Companys Board of Directors, the CASH Plan, the Administrative Committee of the CASH Plan, and the
following current or former employees and/or former directors of the Company: Messrs. Wang, Kumar,
Zar, Artzt, Peter A. Schwartz, and Charles P. McWade; and various unidentified alleged fiduciaries
of the CASH Plan. The complaint alleged that the defendants breached their fiduciary duties by
causing the CASH Plan to invest in Company securities and sought damages in an unspecified amount.

A derivative lawsuit was filed by Charles Federman against certain current and former directors of
the Company, based on essentially the same allegations as those contained in the February and March
2002 stockholder lawsuits discussed above. This action was commenced in April 2002 in Delaware
Chancery Court, and an amended complaint was filed in November 2002. The defendants named in the
amended complaint were the Company as a nominal defendant, current Company directors Mr. Lewis S.
Ranieri, and The Honorable Alfonse M. DAmato, and former Company directors Ms. Shirley Strum Kenny
and Messrs. Wang, Kumar, Artzt, Willem de Vogel, Richard Grasso, and Roel Pieper. The derivative
suit alleged breach of fiduciary duties on the part of all the individual defendants and, as
against the former management director defendants, insider trading on the basis of allegedly
misappropriated confidential, material information. The amended complaint sought an accounting and
recovery on behalf of the Company of an unspecified amount of damages, including recovery of the
profits allegedly realized from the sale of common stock of the Company.

On August 25, 2003, the Company announced the settlement of all outstanding litigation related to
the above-referenced stockholder and derivative actions as well as the settlement of an additional
derivative action filed by Charles Federman that had been pending in Delaware. As part of the
class action settlement, which was approved by the Federal Court in December 2003, the Company
agreed to issue a total of up to 5.7 million shares of common stock to the stockholders represented
in the three class action lawsuits, including payment of attorneys fees. The Company has
completed the issuance of the settlement shares as well as payment of $3.3 million to the
plaintiffs attorneys in legal fees and related expenses

In settling the derivative suits, which settlement was also approved by the Federal Court in
December 2003, the Company committed to maintain certain corporate governance practices. Under the
settlement,

the Company, the individual defendants and all other current and former officers and directors of
the Company were released from any potential claim by stockholders arising from accounting-related
or other public statements made by the Company or its agents from January 1998 through February
2002 (and from January 1998 through May 2003 in the case of the employee ERISA action). The
individual defendants were released from any potential claim by or on behalf of the Company
relating to the same matters.

On October 5, 2004 and December 9, 2004, four purported Company stockholders served motions to
vacate the Order of Final Judgment and Dismissal entered by the Federal Court in December 2003 in
connection with the settlement of the derivative action. These motions primarily seek to void the
releases that were granted to the individual defendants under the settlement. On December 7, 2004,
a motion to vacate the Order of Final Judgment and Dismissal entered by the Federal Court in
December 2003 in connection with the settlement of the 1998 and 2002 stockholder lawsuits discussed
above was filed by Sam Wyly and certain related parties. The motion seeks to reopen the settlement
to permit the moving stockholders to pursue individual claims against certain present and former
officers of the Company. The motion states that the moving stockholders do not seek to file claims
against the Company. These motions (the 60(b) Motions) have been fully briefed. On June 14, 2005,
the Federal Court granted movants motion to be allowed to take limited discovery prior to the
Federal Courts ruling on the 60(b) Motions. Such discovery is ongoing. No hearing date is
currently set for the 60(b) Motions.

The Government Investigation

In 2002, the United States Attorneys Office for the Eastern District of New York (the USAO) and
the staff of the Northeast Regional Office of the SEC commenced an investigation concerning certain
of the Companys past accounting practices, including the Companys revenue recognition procedures
in periods prior to the adoption of the Companys business model in October 2000.

In response to the investigation, the Board of Directors authorized the Audit Committee (now the
Audit and Compliance Committee) to conduct an independent investigation into the timing of revenue
recognition by the Company. On October 8, 2003, the Company reported that the ongoing
investigation by the Audit and Compliance Committee had preliminarily found that revenues were
prematurely recognized in the fiscal year ended March 31, 2000, and that a number of software
license agreements appeared to have been signed after the end of the quarter in which revenues
associated with such software license agreements had been recognized in that fiscal year. Those
revenues, as the Audit and Compliance Committee found, should have been recognized in the quarter
in which the software license agreements were signed. Those preliminary findings were reported to
government investigators.

Following the Audit and Compliance Committees preliminary report and at its recommendation, four
executives who oversaw the relevant financial operations during the period in question, including
Ira Zar, resigned at the Companys request. On January 22, 2004, one of these individuals pled
guilty to federal criminal charges of conspiracy to obstruct justice in connection with the ongoing
investigation. On April 8, 2004, Mr. Zar and two other former executives pled guilty to charges of
conspiracy to obstruct justice and conspiracy to commit securities fraud in connection with the
investigation. Mr. Zar also pled guilty to committing securities fraud. The four former
executives are awaiting sentencing. The SEC filed related actions against each of the four former
executives, alleging that they participated in a widespread practice that resulted in the improper
recognition of revenue by the Company. Without admitting or denying the allegations in the
complaints filed by the SEC, Mr. Zar and the three other executives each consented to a permanent
injunction against violating, or aiding and abetting violations of, the securities laws, and also
to a permanent bar from serving as an officer or director of a publicly held company. Litigation
with respect to the SECs claims for disgorgement and penalties is continuing.

A number of other employees, primarily in the Companys legal and finance departments were
terminated or resigned as a result of matters under investigation by the Audit and Compliance
Committee, including Steven Woghin, the Companys former General Counsel. Stephen Richards, the
Companys former Executive Vice President of Sales, resigned from his position and was relieved of
all duties in April 2004,

and left the Company at the end of June 2004. Additionally, on April 21, 2004, Sanjay Kumar
resigned as Chairman, director and Chief Executive Officer of the Company, and assumed the role of
Chief Software Architect. Thereafter, Mr. Kumar resigned from the Company effective June 30, 2004.

In April 2004, the Audit and Compliance Committee completed its investigation and determined that
the Company should restate certain financial data to properly reflect the timing of the recognition
of license revenue for the Companys fiscal years ended March 31, 2001 and 2000. The Audit and
Compliance Committee believes that the Companys financial reporting related to contracts executed
under its current business model is unaffected by the improper accounting practices that were in
place prior to the adoption of the current business model in October 2000 and that had resulted in
the aforementioned restatements, and that the historical issues it had identified in the course of
its independent investigation concerned the premature recognition of revenue. However, certain of
these prior period accounting errors have had an impact on the subsequent financial results of the
Company as described in Note 12 to the Consolidated Financial Statements in the Companys amended
Annual Report on Form 10-K/A for the fiscal year ended March 31, 2005. The Company continues to
implement and consider additional remedial actions it deems necessary.

On September 22, 2004, the Company reached agreements with the USAO and the SEC by entering into a
Deferred Prosecution Agreement (the DPA) with the USAO and consenting to the entry of a Final
Consent Judgment in a parallel proceeding brought by the SEC (the Consent Judgment, and together
with the DPA, the Agreements). The Federal Court approved the DPA on September 22, 2004 and
entered the Consent Judgment on September 28, 2004. The Agreements resolve the USAO and SEC
investigations into certain of the Companys past accounting practices, including its revenue
recognition policies and procedures, and obstruction of their investigations.

Under the DPA, the Company has agreed to establish a $225 million fund for purposes of restitution
to current and former stockholders of the Company, with $75 million to be paid within 30 days of
the date of approval of the DPA by the Federal Court, $75 million to be paid within one year after
the approval date and $75 million to be paid within 18 months after the approval date. The Company
made the first $75 million restitution payment into an interest-bearing account under terms
approved by the USAO on October 22, 2004. The Company made the second $75 million restitution
payment into an interest-bearing account under terms approved by the USAO on September 22, 2005.
The Company made the third and final $75 million restitution payment into an interest-bearing
account under terms approved by the USAO on March 22, 2006. The restitution fund money will be
allocated to current and former stockholders of the Company in the near future. Pursuant to the
DPA, the Company proposed and the USAO accepted, on or about November 4, 2004, the appointment of
Kenneth R. Feinberg as Fund Administrator. Also, pursuant to the Agreements, Mr. Feinberg
submitted to the USAO on or about June 28, 2005, a Plan of Allocation for the Restitution Fund (the
Restitution Fund Plan). The Restitution Fund Plan was approved by the Federal Court on August 18,
2005. The Companys payments to the restitution fund, which will be allocated in the near future
as determined by the Fund Administrator, are in addition to the amounts that the Company previously
agreed to provide current and former stockholders in settlement of certain class action lawsuits in
August 2003 (see  Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004). This
latter amount was paid by the Company in December 2004 in shares at a then total value of
approximately $174 million.

Under the Agreements, the Company also agreed, among other things, to take the following actions by
December 31, 2005: (1) to add a minimum of two new independent directors to its Board of Directors;
(2) to establish a Compliance Committee of the Board of Directors; (3) to implement an enhanced
compliance and ethics program, including appointment of a Chief Compliance Officer; (4) to
reorganize its Finance and Internal Audit Departments; and (5) to establish an executive disclosure
committee. The reorganization of the Finance Department is in progress and the reorganization of
the Internal Audit Department is substantially complete. On December 9, 2004, the Company
announced that Patrick J. Gnazzo had been named Senior Vice President, Business Practices, and
Chief Compliance Officer, effective January 10, 2005. On February 11, 2005, the Board of Directors
elected William McCracken to

serve as a new independent director, and also changed the name of the Audit Committee of the Board
of Directors to the Audit and Compliance Committee of the Board of Directors and amended the
Committees charter. On April 11, 2005, the Board of Directors elected Ron Zambonini to serve as a
new independent director. On November 11, 2005, the Board of Directors elected Christopher Lofgren
to serve as a new independent director.

Under the Agreements, the Company also agreed to the appointment of an Independent Examiner to
examine the Companys practices for the recognition of software license revenue, its ethics and
compliance policies and other specified matters. Under the Agreements, the Independent Examiner
also reviews the Companys compliance with the Agreements and periodically reports findings and
recommendations to the USAO, SEC and Board of Directors. On March 16, 2005, the Federal Court
appointed Lee S. Richards III, Esq. of Richards Spears Kibbe & Orbe LLP (now, Richards Kibbe & Orbe
LLP), to serve as Independent Examiner. On September 15, 2005, Mr. Richards issued his six-month
report concerning his recommendations regarding best practices concerning certain areas specified
in the Agreements. On December 15, 2005, March 15, 2006, June 15, 2006, and September 15, 2006,
Mr. Richards issued quarterly reports concerning the Companys compliance with the Agreements.

In his Fourth Report, dated June 15, 2006, the Independent Examiner described certain issues
regarding the Companys internal accounting controls and reorganization of the Finance Department.
Accordingly, by letter dated September 14, 2006, the USAO informed the Federal Court that the USAO
had determined to extend the term of the Independent Examiner to May 1, 2007 (or such earlier date
as the USAO, in its discretion, determines in the future). The extension was made pursuant to
paragraph 22 of the DPA and with the consent of the Company. The Independent Examiners term was
otherwise set to expire on September 16, 2006. The USAO, the SEC, the Independent Examiner and the
Company agreed that the extension to May 1, 2007 was appropriate in light of the
control-environment and commission-related material weaknesses announced in the 2006 Form 10-K, and
issues concerning the reorganization of the Finance Department to be addressed by the Companys new
Chief Financial Officer. Beyond the control issues identified in the Independent Examiners June
15, 2006 report, the USAO advised the Federal Court that the Company has, to date, substantially
complied with the terms of the DPA. The USAO also informed the Federal Court that if the control
issues described above are resolved by May 1, 2007 (or such earlier date as the USAO, in its
discretion, determines), and the Company is otherwise in compliance with the DPA, the USAO will
seek the Federal Courts dismissal with prejudice of the Information filed against the Company
shortly after the Independent Examiner issues his final report, and the SEC also will evaluate the
Companys compliance with the Consent Judgment.

Pursuant to the Consent Judgment with the SEC, the Company is permanently enjoined from violating
Section 17(a) of the Securities Act of 1933 (the Securities Act), Sections 10(b), 13(a) and
13(b)(2) of the Securities Exchange Act of 1934 (the Exchange Act) and Rules 10b-5, 12b-20, 13a-1
and 13a-13 under the Exchange Act. Pursuant to the Agreements, the Company has also agreed to
comply in the future with federal criminal laws, including securities laws. In addition, the
Company has agreed not to make any public statement, in litigation or otherwise, contradicting its
acceptance of responsibility for the accounting and other matters that are the subject of the
investigations, or the related allegations by the USAO, as set forth in the DPA.

Under the Agreements, the Company also is required to cooperate fully with the USAO and SEC
concerning their ongoing investigations into the misconduct of any present or former employees of
the Company. The Company also agreed to fully support efforts by the USAO and SEC to obtain
disgorgement of compensation from any present or former officer of the Company who engaged in any
improper conduct while employed at the Company.

After the Independent Examiners term expires, the USAO will seek to dismiss its charges against
the Company. However, the Company shall be subject to prosecution at any time if the USAO
determines that the Company has deliberately given materially false, incomplete or misleading
information pursuant to the DPA, has committed any federal crime after the date of the DPA or has
knowingly, intentionally and materially violated any provision of the DPA (including any of those
described above).

On September 22, 2004, Mr. Woghin, the Companys former General Counsel, pled guilty to a
two-count information charging him with conspiracy to commit securities fraud and obstruction of
justice. The SEC also filed a complaint in the Federal Court against Mr. Woghin alleging that he
violated Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and
Rules 10b-5 and 13b2-1 thereunder. The complaint further alleged that under Section 20(e) of the
Exchange Act, Mr. Woghin aided and abetted the Companys violations of Sections 10(b), 13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13
thereunder. Mr. Woghin consented to a partial judgment imposing a permanent injunction enjoining
him from committing violations in the future and permanently baring him from serving as an officer
or director of a public company. The SECs claims for disgorgement and civil penalties against Mr.
Woghin are pending. Mr. Woghins sentencing is currently scheduled for early November 2006.

Additionally, on September 22, 2004, the SEC filed complaints in the Federal Court against Sanjay
Kumar and Stephen Richards alleging that they violated Section 17(a) of the Securities Act,
Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder. The
complaints further alleged that under Section 20(e) of the Exchange Act, Messrs. Kumar and Richards
aided and abetted the Companys violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B)
of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The complaints sought to
enjoin Messrs. Kumar and Richards from further violations of the Securities Act and the Exchange
Act and for disgorgement of gains they received as a result of these violations. On June 14, 2006,
Messrs. Kumar and Richards consented to partial judgments imposing permanent injunctions enjoining
them from committing such violations of the federal securities laws in the future and permanently
barring them from serving as officers or directors of public companies. The SECs claims against
Messrs. Kumar and Richards for disgorgement and civil penalties are pending.

On September 23, 2004, the USAO filed, in the Federal Court, a ten-count indictment charging
Messrs. Kumar and Richards with conspiracy to commit securities fraud and wire fraud, committing
securities fraud, filing false SEC filings, conspiracy to obstruct justice and obstruction of
justice. Additionally, Mr. Kumar was charged with one count of making false statements to an agent
of the Federal Bureau of Investigation and Mr. Richards was charged with one count of perjury in
connection with sworn testimony before the SEC.

On or about June 29, 2005, the USAO filed a superseding indictment against Messrs. Kumar and
Richards, dropping one count and adding several allegations to certain of the nine remaining
counts. On April 24, 2006, Messrs. Kumar and Richards pled guilty to all counts in the superseding
indictment filed by the USAO. On November 2, 2006, Mr. Kumar was
sentenced to a term of imprisonment for twelve years and a fine of $8
million. The Federal Court deferred any decisions on restitution
until early 2007. Sentencing of Mr. Richards is currently
scheduled for mid-November 2006.

On April 21, 2006, Thomas M. Bennett, the Companys former Senior Vice President, Business
Development, was arrested pursuant to an arrest warrant issued by the Federal Court. The arrest
warrant charged Mr. Bennett with three counts of conspiracy to commit obstruction of justice in
violation of Title 18, United States Code, Sections 1510(a) and 1505, and Title 18, United States
Code, Section 371. On June 21, 2006, Mr. Bennett pled guilty to one count of conspiracy to
obstruct justice. Sentencing of Mr. Bennett is currently scheduled to take place in late November
2006.

As required by the Agreements, the Company continues to cooperate with the USAO and SEC in
connection with their ongoing investigations of the conduct described in the Agreements, including
providing documents and other information to the USAO and SEC. The Company cannot predict at this
time the outcome of the USAOs and SECs ongoing investigations, including any actions the Company
may have to take in response to these investigations.

In June 2004, a purported derivative action was filed in the Federal Court by Ranger Governance
Ltd. against certain current or former employees and/or directors of the Company. In July 2004,
two additional purported derivative actions were filed in the Federal Court by purported Company
stockholders against certain current or former employees and/or directors of the Company. In
November 2004, the Federal Court issued an order consolidating these three derivative actions. The
plaintiffs filed a consolidated amended complaint (the Consolidated Complaint) on January 7, 2005.
The Consolidated Complaint names as defendants Messrs. Wang, Kumar, Zar, Artzt, DAmato, Richards,
Ranieri and Woghin; David Kaplan; David Rivard; Lloyd Silverstein; Michael A. McElroy; Messrs
McWade and Schwartz; Gary Fernandes; Robert E. La Blanc; Jay W. Lorsch; Kenneth Cron; Walter P.
Schuetze; Messrs. de Vogel and Grasso; Roel Pieper; KPMG LLP; and Ernst & Young LLP. The Company
is named as a nominal defendant. The Consolidated Complaint alleges a claim against Messrs. Wang,
Kumar, Zar, Kaplan, Rivard, Silverstein, Artzt, DAmato, Richards, McElroy, McWade, Schwartz,
Fernandes, La Blanc, Ranieri, Lorsch, Cron, Schuetze, de Vogel, Grasso, Pieper and Woghin for
contribution towards the consideration the Company had previously agreed to provide current and
former stockholders in settlement of certain class action litigation commenced against the Company
and certain officers and directors in 1998 and 2002 (see  Stockholder Class Action and
Derivative Lawsuits Filed Prior to 2004) and seeks on behalf of the Company compensatory and
consequential damages in an amount not less than $500 million in connection with the USAO and SEC
investigations (see  The Government Investigation). The Consolidated Complaint also alleges a
claim seeking unspecified relief against Messrs. Wang, Kumar, Zar, Kaplan, Rivard, Silverstein,
Artzt, DAmato, Richards, McElroy, McWade, Fernandes, La Blanc, Ranieri, Lorsch, Cron, Schuetze, de
Vogel and Woghin for violations of Section 14(a) of the Exchange Act for alleged false and material
misstatements made in the Companys proxy statements issued in 2002 and 2003. The Consolidated
Complaint also alleges breach of fiduciary duty by Messrs. Wang, Kumar, Zar, Kaplan, Rivard,
Silverstein, Artzt, DAmato, Richards, McElroy, McWade, Schwartz, Fernandes, La Blanc, Ranieri,
Lorsch, Cron, Schuetze, de Vogel, Grasso, Pieper and Woghin. The Consolidated Complaint also seeks
unspecified compensatory, consequential and punitive damages against Messrs. Wang, Kumar, Zar,
Kaplan, Rivard, Silverstein, Artzt, DAmato, Richards, McElroy, McWade, Schwartz, Fernandes, La
Blanc, Ranieri, Lorsch, Cron, Schuetze, de Vogel, Grasso, Pieper and Woghin based upon allegations
of corporate waste and fraud. The Consolidated Complaint also seeks unspecified damages against
Ernst & Young LLP and KPMG LLP, for breach of fiduciary duty and the duty of reasonable care, as
well as contribution and indemnity under Section 14(a) of the Exchange Act. The Consolidated
Complaint requests restitution and rescission of the compensation earned under the Companys
executive compensation plan by Messrs. Artzt, Kumar, Richards, Zar, Woghin, Kaplan, Rivard,
Silverstein, Wang, McElroy, McWade and Schwartz. Additionally, pursuant to Section 304 of the
Sarbanes-Oxley Act, the Consolidated Complaint seeks reimbursement of bonus or other
incentive-based equity compensation received by defendants Wang, Kumar, Schwartz and Zar, as well
as alleged profits realized from their sale of securities issued by the Company during the time
periods they served as the Chief Executive Officer (Messrs. Wang and Kumar) and Chief Financial
Officer (Messrs. Schwartz and Zar) of the Company. Although no relief is sought from the Company,
the Consolidated Complaint seeks monetary damages, both compensatory and consequential, from the
other defendants, including current or former employees and/or directors of the Company, KPMG LLP
and Ernst & Young LLP in an amount totaling not less than $500 million.

The consolidated derivative action has been stayed pending resolution of the 60(b) Motions (see 
Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004). Also, on February 1, 2005,
the Company established a Special Litigation Committee of independent members of its Board of
Directors to, among other things, control and determine the Companys response to the consolidated
derivative action and the 60(b) Motions. The Special Litigation Committee is continuing to review
these matters. The Company is obligated to indemnify its officers and directors under certain circumstances to the
fullest extent permitted by Delaware law. As a part of that obligation, the Company has advanced
and

will continue to advance certain attorneys fees and expenses incurred by current and former
officers and directors in various litigations and investigations arising out of similar
allegations, including the litigation described above.

Texas Litigation

On August 9, 2004, a petition was filed by Sam Wyly and Ranger Governance, Ltd. against the Company
in the District Court of Dallas County, Texas, seeking to obtain a declaratory judgment that
plaintiffs did not breach two separation agreements they entered into with the Company in 2002 (the
2002 Agreements). Plaintiffs seek to obtain this declaratory judgment in order to file a
derivative suit on behalf of the Company (see Derivative Actions Filed in 2004 above). On
September 3, 2004, the Company filed an answer to the petition and on September 10, 2004, the
Company filed a notice of removal seeking to remove the action to federal court. On February 18,
2005, Mr. Wyly filed a separate lawsuit in the United States District Court for the Northern
District of Texas (the Texas Federal Court) alleging that he is entitled to attorneys fees in
connection with the original litigation filed in Texas. The two actions have been consolidated.
On March 31, 2005, the plaintiffs amended their complaint to allege a claim that they were
defrauded into entering the 2002 Agreements and to seek rescission of those agreements and damages.
The amended complaint in the Ranger Governance litigation seeks rescission of the 2002 Agreements,
unspecified compensatory, consequential and exemplary damages and a declaratory judgment that the
2002 Agreements are null and void and that plaintiffs did not breach the 2002 Agreements. On May
11, 2005, the Company moved to dismiss the Texas litigation. On July 21, 2005, the plaintiffs
filed a motion for summary judgment. On July 22, 2005, the Texas Federal Court dismissed the
latter two motions without prejudice to refiling the motions later in the action. On September 1,
2005, the Texas Federal Court granted the Companys motion to transfer the action to the Federal
Court. Since the transfer, there have been no significant activities or developments.

Other Civil Actions

In June 2004, a lawsuit captioned
Scienton Technologies, Inc. et al. v. Computer Associates
International, Inc.
, was filed in the Federal Court. The complaint seeks monetary damages in
various amounts, some of which are unspecified, but which are alleged to exceed $868 million, based
upon claims for, among other things, breaches of contract, misappropriation of trade secrets, and
unfair competition. This matter is in the early stages of discovery. Although the ultimate
outcome cannot be determined, the Company believes that the claims are unfounded and that the
Company has meritorious defenses. In the opinion of management, the resolution of this lawsuit is
not likely to result in the payment of any amount approximating the alleged damages and in any
event, is not expected to have a material adverse effect on the financial position of the Company.

In September 2004, two complaints to compel production of the Companys books and records,
including files that have been produced by the Company to the USAO and SEC in the course of their
joint investigation of the Companys accounting practices (see The Government Investigation)
were filed by two purported stockholders of the Company in Delaware Chancery Court pursuant to
Section 220 of the Delaware General Corporation Law. The first complaint was filed on September
15, 2004, after the Company denied the purported stockholder access to some of the files requested
in her initial demand, in particular files that had been produced by the Company to the USAO and
SEC during the course of their joint investigation. The Company filed its answer to this complaint
on October 15, 2004. On October 11, 2005, the Special Litigation Committee (see Derivative
Actions Filed in 2004) moved to stay this action. On December 13, 2005, the Delaware Chancery
Court denied the Companys motion to stay the action. The Company subsequently agreed to produce
the requested documents, subject to any applicable privileges. On July 25, 2006, the purported
stockholder filed a motion to compel production of the withheld files and un-redacted copies of
certain documents previously produced. On August 23, 2006, the Delaware Chancery Court denied the
motion to compel. The second complaint, filed on September 21, 2004, concerns the inspection of
documents related to Mr. Kumars compensation, the independence of the Board of Directors and
ability of the Board of Directors to sue for return of that compensation. The

Company filed its answer to this complaint on October 15, 2004 and there have been no developments
since that time.

Derivative Actions Filed in 2006

On August 10, 2006, a purported derivative action was filed in the Federal Court by Charles
Federman against certain current or former directors of the Company (the Federman Action). The
complaint names as individual defendants Messrs. Cron, DAmato, Fernandes, La Blanc, Lorsch,
McCracken, Ranieri, Schuetze, Swainson, Zambonini, Artzt, DeVogel, Grasso and Pieper, and Mss.
Unger and Strum Kenny. The Company is named as a nominal defendant. The complaint alleges
purported claims against the individual defendants for breach of fiduciary duty, abuse of control,
gross mismanagement, corporate waste, and violations of Section 14(a) of the Exchange Act for
alleged false and material misstatements made in the Companys proxy statements issued in 2003,
2004 and 2005. These purported claims appear to be premised upon certain disclosures made by the
Company in the 2006 Form 10-K concerning the Companys restatement of prior fiscal periods to
reflect additional (a) non-cash, stock-based compensation expense relating to employee stock option
grants prior to the Companys fiscal year 2002, (b) subscription revenue relating to the early
renewal of certain license agreements, and (c) sales commission expense that should have been
recorded in the third quarter of the Companys fiscal year 2006. The complaint seeks relief
against the individual defendants of an unspecified amount of compensatory damages, equitable
relief including an order setting aside the election of defendants DAmato, Fernandes, La Blanc,
Lorsch, McCracken, Ranieri, Schuetze, Swainson, Unger, and Zambonini to the Companys Board of
Directors, an award of plaintiffs costs and expenses, including reasonable attorneys fees, as
well as other unspecified damages allegedly sustained by the Company. In the opinion of
management, the resolution of this lawsuit is not expected to have a material adverse effect on the
financial position of the Company.

On September 13, 2006, a purported derivative action was filed in the Delaware Chancery Court by
Muriel Kaufman asserting purported derivative claims against Messrs. Kumar, Wang, Zar, Silverstein,
Woghin, Richards, Artzt, Cron, DAmato, La Blanc, Ranieri, Lorsch, Schuetze, Vieux, De Vogel and
Grasso, and Ms. Strum Kenny. The Company is named as a nominal defendant. The complaint alleges
purported claims against the individual defendants for breach of fiduciary duty, corporate waste
and contribution and indemnification, in connection with the accounting fraud and obstruction of
justice that led to the criminal prosecution of certain former officials of the Company and to the
DPA (see  The Government Investigation) and in connection with the settlement of certain class
action and derivative lawsuits (see  Stockholder Class Action and Derivative Lawsuits Filed
Prior to 2004). The complaint seeks an unspecified amount of compensatory damages, an accounting
from each individual defendant, an award of plaintiffs costs and expenses, including reasonable
attorneys fees, and other unspecified damages allegedly sustained by the Company. In the opinion
of management, the resolution of this lawsuit is not expected to have a material adverse effect on
the financial position of the Company.

On September 15, 2006, a purported derivative action was filed in the Federal Court by Bert
Vladimir and Irving Rosenzweig against certain current or former directors of the Company (the
Vladimir Action). The complaint names as individual defendants Messrs. Kumar, Artzt, Wang,
DAmato, Fernandes, La Blanc, Ranieri, Lorsch, Schuetze, DeVogel, Cron, McCracken, Swainson,
Zambonini, Pieper, Grasso, Goldstein and Lofgren, and Ms. Unger. The Company is named as a nominal
defendant. The complaint alleges purported claims against the individual defendants for breach of
fiduciary duty and violations of Section 14(a) of the Exchange Act. These purported claims appear
to be premised upon certain disclosures made by the Company in the 2006 Form 10-K, concerning the
Companys restatement of prior fiscal periods to reflect additional (a) non-cash, stock-based
compensation expense relating to employee stock option grants prior to the Companys fiscal year
2002, (b) subscription revenue relating to the early renewal of certain license agreements, and (c)
sales commission expense that should have been recorded in the third quarter of the Companys
fiscal year 2006. The complaint further alleges that certain of these allegations may have
constituted violation of the spirit, if not the letter of the DPA. The complaint seeks relief
against the individual defendants of an unspecified amount of compensatory and

punitive damages,
equitable relief including an order rescinding certain stock option grants, and an award of
plaintiffs costs and expenses, including reasonable attorneys fees. In the opinion of
management, the resolution of this lawsuit is not expected to have a material adverse effect on the
financial position of the Company.

By order dated October 26, 2006, the Federal Court ordered the Federman Action and the Vladimir
Action consolidated. Under the order, the actions are now captioned CA, Inc. Shareholders
Derivative Litigation Employee Option Action, and the plaintiffs were given 45 days to file a
consolidated complaint.

The Company, various subsidiaries, and certain current and former officers have been named as
defendants in various other lawsuits and claims arising in the normal course of business. The
Company believes that it has meritorious defenses in connection with such lawsuits and claims, and
intends to vigorously contest each of them. In the opinion of the Companys management, the
results of these other lawsuits and claims, either individually or in the aggregate, are not
expected to have a material effect on the Companys financial position, results of operations, or
cash flow.

NOTE K  SUBSEQUENT EVENTS

In October 2006, the Company announced that its Board of Directors adopted a new Stockholder
Protection Rights Plan (the Rights Plan) which will replace the Companys existing rights plan when
it expires on November 30, 2006. The adoption of the Rights Plan was to address the corporate
governance concerns associated with the existing rights plans. The Company will ask its
stockholders to vote on the Rights Plan at the Companys 2007 annual meeting. In connection with
the adoption of the Rights Plan, the Company declared a dividend of one right on each outstanding
share of the Companys common stock. The dividend will be paid on November 30, 2006 upon
expiration of CAs existing rights plan to stockholders of record on October 26, 2006.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on
Form 10-Q
(
Form 10-Q
) contains certain forward-looking information
relating to CA, Inc. (the Company, Registrant, CA, we, our, or us) that is based on the
beliefs of and assumptions made by our management as well as information currently available to
management. When used in this
Form 10-Q
, the words anticipate, believe, estimate, expect,
and similar expressions are intended to identify forward-looking information. Such information
includes, for example, the statements made under the caption Outlook in this MD&A, but also
appears in other parts of this
Form 10-Q
. This forward-looking information reflects our current
views with respect to future events and is subject to certain risks, uncertainties, and
assumptions, some of which are described in the section Risk Factors in our Annual Report on
Form 10-K for the fiscal year ended March 31, 2006 filed with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties occur, or should our assumptions
prove incorrect, actual results may vary materially from those described in this
Form 10-Q
as
anticipated, believed, estimated, or expected. We do not intend to update these forward-looking
statements.

QUARTERLY UPDATE



In July 2006, we acquired XOsoft, Inc., a privately held company
that provided continuous application availability solutions that
minimize application downtime and accelerate time to recovery. The
acquisition enables us to offer a complete recovery management
solution that allows customers to minimize the risk of data loss,
reduce the time spent on backups and expedite recovery of critical
business services.



In July 2006, we announced that Nancy E. Cooper was named
Executive Vice President and Chief Financial Officer of the
Company, reporting to our Chief Executive Officer. Her
appointment was effective on August 15, 2006.



In August 2006, we announced that Dr. Ajei S. Gopal joined CA as
Senior Vice President and General Manager of the Enterprise
Systems Management (ESM) business unit. Mr. Gopal succeeds Al
Nugent who was recently appointed our Chief Technology Officer.



In August 2006, we announced a fiscal year 2007 cost reduction and
restructuring plan (FY07 Plan) that is expected to yield
approximately $200 million in annualized savings when completed.
We currently expect a workforce reduction of approximately 1,400
positions, including 300 positions associated with joint ventures,
facilities consolidations and other cost reduction initiatives. We
expect to incur total pre-tax restructuring charges of
approximately $150 million over the 2007 and 2008 fiscal years in
connection with the restructuring plan.



In August 2006, we completed a sale and lease-back of our
corporate headquarters located in Islandia, New York. The
transaction resulted in net proceeds to the Company of
approximately $201 million and a gain of approximately $7 million,
which we will defer and amortize as a reduction to rent expense on
a straight-line basis over the lease term.



In August 2006, we announced the commencement of a tender offer to
purchase outstanding CA common stock. This tender offer
represented the initial phase of a $2 billion stock repurchase
plan that we announced in June 2006. On September 14, 2006, the
tender offered expired and we purchased 41,225,515 shares at a
purchase price of $24.00 per share, for a total price of
approximately $989 million.



In September 2006, we announced that Amy Fliegelman Olli was named
Executive Vice President and Co-General Counsel.



In September 2006, we acquired Cendura, a privately held provider
of IT service management and application service delivery
solutions. The acquisition of Cendura strengthens the competitive
position of our Configuration Management Database (CMDB) product,
a key component of our Business Services Optimization (BSO)
solutions.



In September 2006, we announced a new release of Unicenter Network
and Systems Management (Unicenter NSM) that offers a management
database (MDB) built on Microsoft SQL Server and eases integration
of CA and third-party management solutionsenabling customers to
optimize service availability while protecting their existing IT
investments.

In September 2006, we announced Day One support for IBMs z/OS and
z/OS.e version 1.8 across its mainframe software product line,
continuing our unbroken record of support for new releases of the
z/OS operating system on the very same day that the operating
system becomes generally available.

PERFORMANCE INDICATORS

Management uses several quantitative performance indicators to assess our financial results and
condition. Each provides a measurement of the performance of our business model and how well we
are executing our plan.

Our subscription-based business model is unique among our competitors in the software industry and
it may be difficult to compare our results for many of our performance indicators with those of our
competitors. The following is a summary of the principal quantitative performance indicators that
management uses to review performance:

Analyses of our performance indicators, including general trends, can be found in the Results of
Operations and Liquidity and Capital Resources sections of this MD&A. The performance
indicators discussed below are those that we believe are unique due to our subscription-based
business model.

Subscription Revenue
 Subscription revenue is the ratable revenue recognized in a period
from amounts previously recorded as deferred subscription value. If the weighted average life of
our license agreements remains constant, an increase in deferred subscription value will ultimately
result in an increase in subscription revenue.

Deferred Subscription Value
 Under our business model, the portion of the license
contract value that has not yet been earned creates what we refer to as deferred subscription
value. As revenue is ratably recognized (evenly on a monthly basis), it is reported as
Subscription Revenue on our Consolidated Condensed Statements of Operations, and the deferred
subscription value attributable to that contract is correspondingly reduced. When recognized as
revenue, the amount is reported on the Subscription revenue line item in our Consolidated
Condensed Statements of Operations. If a customer pays for software prior to the recognition of
revenue, the amount is reported as a liability entitled Deferred subscription revenue (collected)
on our Consolidated Condensed Balance Sheets. Customers do not always pay for software in equal
annual installments over the life of a license agreement. The amount collected under a license
agreement for the next twelve months but not yet recognized as revenue is reported as a liability
entitled Deferred subscription revenue (collected)  current on our Consolidated Condensed
Balance Sheets. The amount paid under a license agreement for periods subsequent to the next
twelve months, which will be recognized as revenue on a monthly basis only in those future years,
is reported as a liability entitled Deferred subscription revenue (collected)  noncurrent on
our Consolidated Condensed Balance Sheets. The increase or decrease in current payments
attributable to periods subsequent to the next twelve months is reported as an operating activity
entitled Deferred subscription revenue (collected)  noncurrent in our Consolidated Condensed
Statements of Cash Flows.

Payments received in the current period that are attributable to later years of a license agreement
have a positive impact in the current period on billings and cash provided by continuing operating
activities. Accordingly, to the extent such payments are attributable to the later years of a
license agreement, the license will provide a correspondingly reduced contribution to billings and
cash from operating activities during the licenses later years.

New Deferred Subscription Value
 New deferred subscription value represents the total
incremental value (contract value) of software licenses sold in a period, which will be accounted
for under our subscription model of revenue recognition. In the second quarter of fiscal year
2005, we began offering more flexible license terms to our channel partners end users,
necessitating ratable recognition of revenue for the majority of our indirect business. Prior to
July 1, 2004, such channel license revenue had been recorded up-front on a sell-through basis (when
a distributor, reseller, or value added reseller (VAR) sells the software product to its customers)
and reported on the Software fees and other line item on the Consolidated Condensed Statements of
Operations. New deferred subscription value excludes the value associated with single-year
maintenance-only license agreements, license-only indirect sales, and professional services
arrangements and does not include that portion of bundled maintenance or unamortized discounts that
are converted into subscription revenue upon renewal of prior business model contracts.

New deferred subscription value is what we expect to collect over time from our customers based
upon contractual license agreements entered into during a reporting period. This amount is
recognized as

subscription revenue ratably over the applicable software license term. The license
agreements that contribute to new deferred subscription value represent binding payment commitments
by customers over periods generally up to three years. Our new deferred subscription value
typically increases in each consecutive fiscal quarter, with the fourth quarter being the
strongest. However, since new deferred
subscription value is impacted by the volume and dollar amount of contracts coming up for renewal
and the amount of early contract renewals, the change in new deferred subscription value, relative
to previous periods, does not necessarily correlate to the change in billings or cash receipts,
relative to previous periods. The contribution to current period revenue from new deferred
subscription value from any single license agreement is relatively small, since revenue is
recognized ratably over the applicable license agreement term.

Weighted Average License Agreement Duration in Years
 The weighted average license
agreement duration in years reflects the duration of all software licenses executed during a
period, weighted to reflect the contract value of each individual software license. The weighted
average duration is impacted by the volume and dollar amount of contracts coming up for renewal,
and therefore may change from period to period and will not necessarily correlate to the prior year
periods.

RESULTS OF OPERATIONS

Revenue:

The following table presents the percentage of total revenue and the percentage of
period-over-period dollar change for the revenue line items on our Consolidated Condensed
Statements of Operations for the three and six-month periods ended September 30, 2006 and 2005.
These comparisons of past financial results are not necessarily indicative of future results.

For the Three Months

For the Six Months

Ended September 30,

Ended September 30,

Percentage

Percentage

Percentage

Percentage

of

of

of

of

Total

Dollar

Total

Dollar

Revenue

Change

Revenue

Change

2006/

2006/

2006

2005

2005

2006

2005

2005

(restated)

(restated)

Revenue

Subscription revenue

77

%

74

%

8

%

77

%

75

%

7

%

Maintenance

11

%

12

%

(1

%)

11

%

12

%

(2

%)

Software fees and other

3

%

5

%

(35

%)

3

%

4

%

(35

%)

Financing fees

1

%

1

%

(54

%)

1

%

1

%

(48

%)

Professional services

8

%

8

%

14

%

8

%

8

%

18

%

Total revenue

100

%

100

%

5

%

100

%

100

%

4

%

Total Revenue

Total revenue for the three months ended September 30, 2006 increased $46 million, or 5%, from the
prior year comparable period to $996 million. Total revenue for the six months ended September 30,
2006 increased $75 million, or 4%, from the prior year comparable period to $1.95 billion. As more
fully described below, the increase was primarily due to growth in subscription revenue and
professional services revenue. These increases were partly offset by declines in maintenance,
software fees and other revenue, and financing fees. Total revenue was favorably impacted by foreign
exchange of $18 million and $20 million for the three and six-month periods ended September 30,
2006, respectively.

Subscription Revenue
Subscription revenue represents the portion of revenue ratably recognized on software license
agreements entered into under our business model. Some of the licenses recorded between October
2000, when our business model was implemented, and the second quarter of fiscal year 2007 continued
to contribute to subscription revenue on a monthly, ratable basis. As a result, subscription
revenue for the quarter ended September 30, 2006 includes the ratable recognition of contracts
recorded in the second quarter of fiscal year 2007, as well as contracts and related renewals
recorded between October 2000 and the first quarter of fiscal year 2007, depending on the contract
length. As we begin to reach maturity of our model and based upon the timing of remaining old
business model contract renewals, the impact of the transition to our new business model on
revenues will decline.

Under the prior business model, maintenance revenue was separately identified and was reported on
the Maintenance line item in the Consolidated Condensed Statements of Operations. Under our
business model, maintenance that is bundled with product sales is not separately identified in our
customers license agreements and therefore is included within the Subscription revenue line item
in the Consolidated Condensed Statements of Operations. Under the prior business model, financing
revenue was also separately identified in the Consolidated Condensed Statements of Operations.
Under our business model, financing fees are no longer applicable and the entire contract value is
now recognized as subscription revenue over the term of the contract. We are not able to quantify
the impact that each of these factors had on subscription revenue.

Subscription revenue for the quarter ended September 30, 2006 increased $58 million, or 8%, from
the comparable prior year quarter to $762 million. Sales made directly to our end-user customers,
which we define as our direct business, contributed approximately $708 million to subscription
revenue compared to $666 million in the comparable prior year quarter. The increase was primarily
due to increases in new deferred subscription value from acquired products as well as the manner in
which we record maintenance revenue under our business model, as described above. Sales made
through our channel partners, which we define as our indirect business, contributed approximately
$54 million to subscription revenue compared to $38 million in the comparable prior year period
primarily due to the continued transition of indirect revenue to the ratable model, which began in
the second quarter of fiscal year 2005.

Subscription revenue for the six months ended September 30, 2006 increased $95 million, or 7%, from
the comparable prior year period to $1.50 billion. The direct and indirect businesses contributed
approximately $1.40 billion and $100 million, respectively, as compared to $1.34 billion and $69
million, respectively for the comparable prior year period. The increases for the six month period
are attributable to the same factors as those described above for the second quarter.

For the quarter ended September 30, 2006, we added new deferred subscription value related to our
direct business of $498 million, as compared to $575 million for the comparable prior year period.
The lower level of new deferred subscription value was primarily attributable to our decision to realign and restructure
the sales force to achieve lower cost of sales and higher productivity and more
discipline on contract renewals. We recorded $51 million of new deferred subscription value for
the quarter ended September 30, 2006 related to our indirect business, compared to $47 million in
the prior year. The weighted average duration of license agreements executed in the quarters ended
September 30, 2006 and 2005 was 2.98 and 2.92 years, respectively.

Maintenance

Maintenance revenue for the quarter ended September 30, 2006 decreased $1 million, or 1%, from the
comparable prior fiscal year quarter to $112 million. The decline in maintenance revenue was
primarily attributable to our transition to, and the increased number of license agreements under,
our business model, where maintenance revenue, bundled along with license revenue, is reported on
the Subscription revenue line item on the Consolidated Condensed Statements of Operations. The
combined maintenance and license revenue on these types of license agreements is recognized on a
monthly basis ratably over the term of the

agreement. We are unable to quantify the impact that our
transition to our business model had on maintenance revenue since maintenance bundled with software
licenses is not separately identified. The decline in maintenance revenue was partly offset by
separately identifiable maintenance revenue recorded from acquisitions completed subsequent to the
second quarter of fiscal year 2006 of $8 million. Additionally,
maintenance revenue attributable to the indirect business for the three month period ended
September 30, 2006 increased $5 million compared to comparable prior fiscal year quarter to $17
million.

The amount of maintenance revenue for the six months ended September 30, 2006 decreased
approximately $5 million over the comparable prior fiscal year period to $215 million. The decline
was primarily attributable to the manner in which we record maintenance revenue under our business
model as described above. We recorded approximately $19 million of incremental separately
identifiable maintenance in the first six months of fiscal year 2007 from acquisitions.
Maintenance revenue from our indirect business for the six months ended September 30, 2006
increased $6 million from the comparable prior year period to
$32 million.

Software Fees and Other

Software fees and other revenue consists of revenue related to distribution and original equipment
manufactures (OEM) channel partners (sometimes referred to as our indirect or channel revenue)
that has been recorded on an up-front sell-through basis, certain revenue associated with
acquisitions prior to the transition to our business model, revenue from joint ventures, royalty
revenue and other revenue. New deferred subscription value related to acquisitions is initially
recorded on the acquired companys systems generally under a perpetual or up-front model, and is
typically converted to our ratable model within the first fiscal year after the acquisition. As
these contracts are renewed under our business model, revenue is recognized ratably as subscription
revenue on a monthly basis over the term of the agreement.

Software fees and other revenue for the second quarter of fiscal year 2007 decreased $15 million,
or 35%, from the comparable prior year quarter to $28 million. This reduction is principally due
to a $2 million decline in prior business model revenue, as ratable revenue from new business model
contracts was recognized as subscription revenue in the Consolidated Condensed Statements of
Operations. Additionally, we experienced declines in indirect revenue associated with the
transition to our subscription model, as well as declines in revenue from acquisitions, as compared
with the comparable prior year period.

Software fees and other for the six months ended September 30, 2006 decreased $28 million, or 35%,
from the comparable prior year period to $52 million. The decrease is attributable to the same
factors as those described above for the second quarter decrease.

Financing Fees

Financing fees result from the initial discounting to present value of product sales with extended
payment terms under the prior business model, which required up-front revenue recognition. This
discount initially reduced the related installment accounts receivable and is referred to as
Unamortized discounts. The related unamortized discount is amortized over the life of the
applicable license agreement and is reported as financing fees. Under our business model,
additional unamortized discounts are no longer recorded, since we no longer recognize revenue on an
up-front basis for sales of products with extended payment terms. As expected, for the quarter
ended September 30, 2006, financing fees decreased $7 million, or 54%, from the comparable prior
year quarter to $6 million. The decrease is attributable to the discontinuance of offering license
agreements under the prior business model and is expected to decline to zero over the next several
years.

Financing fees for the six months ended September 30, 2006 decreased $13 million, or 48%, from the
comparable prior year period to $14 million. The decrease for the six month period is attributable
to the same factors as described above for the second quarter decrease.

Professional Services

Professional services revenue for the quarter ended September 30, 2006 increased $11 million, or
14%, from the comparable prior year quarter to $88 million. The increase was attributable to
professional services engagements relating to companies acquired subsequent to the first quarter of
fiscal year 2006 of

approximately $3 million, growth in security software engagements which utilize
Access Control and Identity Management solutions and project and portfolio management services tied
to Clarity solutions.

Professional services revenue for the six months ended September 30, 2006 increased $26 million, or
18%, from the comparable prior year period to $170 million. The increase for the six month period
was attributable to the same factors as described above for the second quarter increase, including
approximately $8 million from engagements relating to acquired companies.

Total Revenue by Geography

The following table presents the amount of revenue earned from the United States and international
geographic regions and corresponding percentage changes for the three and six-month periods ended
September 30, 2006 and 2005. These comparisons of financial results are not necessarily indicative
of future results.

Three Months Ended

Six Months Ended

September 30,

September 30,

(dollars in millions)

2006

2005

Change

2006

2005

Change

(restated)

(restated)

United States

$

527

$

494

7%

$

1,045

$

978

7%

International

469

456

3%

907

899

1%

$

996

$

950

5%

$

1,952

$

1,877

4%

Revenue in the United States increased by approximately $33 million, or 7%, and $67 million, or 7%,
respectively for the three and six-month periods ended September 30, 2006, as compared with the
prior year comparable periods. The increase was primarily attributable to growth from
acquisitions. International revenue increased by approximately $13 million, or 3%, and $8 million,
or 1%, respectively, for the three and six-month periods ended September 30, 2006, primarily due to
the favorable impact from foreign exchange of $18 million and $20 million, respectively.

Price changes did not have a material impact on revenue in the second quarter of fiscal year 2007
or on the comparable prior fiscal year period.

The following table presents expenses as a percentage of total revenue and the percentage of
period-over-period dollar change for the line items on our Consolidated Condensed Statements of
Operations for the three and six-month periods ended September 30, 2006. These comparisons of
financial results are not necessarily indicative of future results.

For the Three Months

For the Six Months

Ended September 30,

Ended September 30,

Percentage

Percentage

Percentage

Percentage

of

of

of

of

Total

Dollar

Total

Dollar

Revenue

Change

Revenue

Change

2006/

2006/

2006

2005

2005

2006

2005

2005

(restated)

(restated)

Operating expenses

Amortization of capitalized software costs

8

%

12

%

(25

%)

10

%

12

%

(16

%)

Cost of professional services

8

%

7

%

23

%

8

%

7

%

22

%

Selling, general, and administrative

43

%

40

%

11

%

44

%

41

%

11

%

Product development and enhancements

18

%

19

%

(1

%)

18

%

19

%

2

%

Commission, royalties and bonuses

7

%

7

%

7

%

7

%

7

%

11

%

Depreciation and amortization of
other intangible assets

4

%

3

%

16

%

4

%

3

%

15

%

Other gains, net

(2

%)



N/A

(1

%)



N/A

Restructuring and other

5

%

5

%

7

%

3

%

2

%

31

%

Charge for in-process research and
development costs

1

%

1

%

(29

%)

1

%

1

%

(44

%)

Total expenses before interest and taxes

92

%

94

%

3

%

93

%

92

%

6

%

Interest expense, net

1

%

1

%

20

%

1

%

1

%

5

%

Note  Amounts may not add to their respective totals due to rounding.

Amortization
of Capitalized Software Costs

Amortization of capitalized software costs consists of the amortization of both purchased software
and internally generated capitalized software development costs. Internally generated capitalized
software development costs are related to new products and significant enhancements to existing
software products that have reached the technological feasibility stage.

Amortization of capitalized software costs for the three and six-month periods ended September 30,
2006 declined by $28 million and $36 million, respectively, from the comparable prior year periods
to $83 million and $188 million, respectively. The decline was primarily attributable to certain
software costs being fully amortized.

Cost of Professional Services

Cost of professional services consists primarily of the personnel-related costs associated with
providing professional services and training to customers. Cost of professional services for the
three and six-month periods ended September 30, 2006 increased $15 million, or 23%, and $27
million, or 22%, respectively, from the comparable prior fiscal year periods to $80 million and
$152 million, respectively. The increases were primarily attributable to the increase in
professional services revenue noted above.

SG&A expenses for the quarter ended September 30, 2006 increased $42 million, or 11%, from the
comparable prior year quarter to $425 million. The increase was primarily attributable to higher
personnel costs of approximately $30 million principally related to recent acquisitions, as well as
a credit recorded to the provision for doubtful accounts in the prior year quarter of approximately
$10 million which did not recur in the current quarter. There were no significant savings realized
within the current quarter associated with the fiscal year 2007 cost reduction and restructuring
plan (FY07 Plan) announced in August 2006 as most of the headcount reductions did not take place
until the end of the quarter.

SG&A expenses for the six-month period ended September 30, 2006 increased $87 million, or 11%,
compared to the prior fiscal year period to $859 million. The increase was primarily attributable
to higher personnel costs of approximately $60 million principally related to recent acquisitions,
as well as a credit recorded to the provision for doubtful accounts in the prior year period of
approximately $14 million which did not recur in the current fiscal period and higher selling and
marketing related costs of approximately $10 million.

Product Development and Enhancements

For the quarter ended September 30, 2006, product development and enhancement expenditures, which
include product support, decreased $1 million, or 1%, from the comparable prior year quarter to
$178 million. For the quarters ended September 30, 2006 and 2005, product development and
enhancement expenditures represented approximately 18% and 19% of total revenue, respectively.
During the second quarter of fiscal year 2006, we continued to focus on and invest in product
development and enhancements for emerging technologies, as well as a broadening of our enterprise
product offerings.

Product development and enhancement expenditures for the six-month period ended September 30, 2006,
increased $6 million, or 2%, from the comparable prior year period to $357 million. For the
six-month periods ended September 30, 2006 and 2005, product development and enhancement
expenditures represented approximately 18% and 19% of total revenue, respectively.

Commissions, Royalties and Bonuses

Commissions, royalties and bonuses for the second quarter of fiscal year 2007 increased $5 million,
or 7%, from the comparable prior year quarter to $73 million. The increase was primarily due to
higher external royalties over the prior year by approximately $5 million due to an increased level
of royalties associated with recent acquisitions, royalties associated with the newly formed Ingres
Corporation, and higher sales of certain royalty bearing channel products. Sales
commissions are expensed in the period in which customers sales contracts are signed, while bonuses
are typically estimated and accrued based on projections of full year performance.

Commissions, royalties and bonuses for the six-months ended September 30, 2006 increased $14
million, or 11%, from the comparable prior year period to $144 million. The increase for the six
months was primarily due to higher bonuses resulting from acquisition-related retention payments
and an increase in the number of non-sales individuals compensated through annual incentive
compensation (bonus) plans, as well as higher external royalties as explained above.

While
commissions expense for the first half of fiscal year 2007 is
consistent with our
commissions expense for the first half of fiscal year 2006, we have made changes to CAs Incentive Compensation Plan (the Incentive Compensation Plan) for fiscal year 2007, as well as
certain commission-related processes, which we believe will enhance our ability to control overall
commissions expense and avoid unexpected increases in commissions expense as occurred in the
second half of fiscal year 2006, as well as improve our ability to effectively estimate,
calculate, monitor, and timely pay sales commissions. For further description of the changes
to the Incentive Compensation Plan and related processes, refer to Critical Accounting Policies
and Business PracticesSales Commissions. Refer also to Item 4, Controls and Procedures and
Part II, Item 1a, Risk Factors.

We have also made substantial changes to our sales organization and sales coverage model. In
April 2006, we expanded our named account direct sales model in which Account Directors and
Account Managers are dedicated to managing the Companys relationships with specific new and
existing enterprise accounts. Their focus is on selling new solutions
to enterprise customers. While reducing the overall size of our sales
force through a
reorganization of the sales force in North America and Latin America, effective in October 2006, we
more than doubled the number of Account Directors and Account Managers who are to perform this
function. Also, in October 2006, the members of our technical sales organization in North America,
consisting of more than 1,500 employees, were assigned revised roles as solution strategists,
technology specialists, and consultants, aligned around our product solutions and business units,
to be deployed as needed by our Account Directors and Account Managers in connection with the sale
of new products and solutions. We also have a core group of sales people who are dedicated to
managing, maintaining and renewing our installed customer base. The balance of our market will be
covered substantially through our resellers and partners. We are engaged in an extensive training
program to enable our sales force to perform their new roles effectively. The purpose of these
changes, together with changes to the Incentive Compensation Plan and
related process changes, is
threefold: i) to address the commissions issues that arose in
connection with the fiscal year 2006 Incentive Compensation Plan;
ii) to reduce costs and increase productivity; and iii) to enable the Company to increase its sales of new products and solutions to new and
existing customers while protecting the Companys installed base. We believe the
uncertainty associated with these matters adversely affected the Companys
overall performance in the first half of
fiscal year 2007. Refer also to Part II, Item 1a, Risk Factors.

Depreciation and Amortization of Other Intangible Assets

Depreciation and amortization of other intangible assets for the quarter ended September 30, 2006
increased $5 million, or 16%, from the comparable prior year quarter to $37 million. The increase
in depreciation and amortization of other intangible assets was primarily due to the amortization
of intangibles recognized in conjunction with recent acquisitions and our ERP system that went live
in April 2006.

Depreciation and amortization of other intangible assets for the six months ended September 30,
2006 increased $9 million, or 15%, from the comparable prior year period to $71 million. The
increases was attributable to the same factors discussed above.

Other Gains, Net

Other
gains, net includes gains and losses attributable to divested assets, certain foreign currency
exchange rate fluctuations, and certain other infrequent events. For the quarter ended September
30, 2006 other gains, net increased by $12 million to $16 million. The increase was principally
due to the sale of shares of an investment in marketable securities for a gain of approximately $14
million.

Other gains, net for the six months ended September 30, 2006 increased $10 million primarily due to
the sale of marketable securities discussed above.

Restructuring and Other

During the second quarter of fiscal year 2007, we recorded restructuring and other charges of
approximately $48 million as compared to $45 million in the prior year comparable quarter. The
primary driver for the charge in fiscal year 2007 was approximately $39 million of severance and
other termination benefits relating to approximately 750 individuals
under the FY07 Plan. The specific plans
associated with the balance of the planned reductions in workforce are still being finalized and
the associated charges will be recorded once the actions are approved by management. We currently
estimate a reduction in workforce of approximately 1,400 individuals under the FY07 Plan, including
approximately 300 positions associated with joint ventures. We expect to incur approximately $150
million in pre-tax charges under the FY07 Plan, associated with workforce reductions and facility
closures. Through September 30, 2006, the Company has terminated approximately 600 individuals
under the FY07 Plan. In addition, we recorded additional restructuring charges associated with the
fiscal 2006 restructuring plan (FY06 Plan) announced in July 2005 of approximately $7 million as
compared to $37 million recorded in the prior year comparable quarter. The total projected cost
for the FY06 Plan is approximately $100 million, of which approximately $83 million has been
recognized. The

associated restructuring liability balances are included in Accrued expenses and
other current liabilities on the Consolidated Condensed Balance Sheets.

Additionally,
we incurred costs of approximately $2 and $3 million in the second quarter of
fiscal years 2007 and 2006, respectively, in connection with the Companys Deferred Prosecution
Agreement entered into with the United States Attorneys Office for the Eastern District of New
York. We also recorded a
charge of approximately $5 million recorded in the prior year associated with termination of a
non-core application development professional services project in the second quarter of fiscal year
2006.

For the six-months ended September 30, 2006, we recorded restructuring and other charges of $59
million as compared to $45 million in the comparable prior year period. The primary driver for the
charge in fiscal year 2007 was approximately $39 million of severance and other termination
benefits related to the FY07 Plan. Charges related to the FY06 Plan recorded in the current fiscal
year were approximately $17 million principally related to severance costs, compared to $37 million
recorded in the comparable prior year period. Additionally, the Company incurred costs of
approximately $3 million in both the six month periods ended September 30, 2006 and 2005,
respectively, in connection with the Companys Deferred Prosecution Agreement entered into with the
United States Attorneys Office for the Eastern District of New York.

Charge for In-Process Research and Development Costs

Charge for in-process research and development cost for the three and six-months ended September
30, 2006 decreased $4 million, or 29%, and $8 million, or 44%, respectively, from the comparable
prior year period to $10 million. The charge for in-process research and development costs was
associated with acquisition of XOsoft during the second quarter of fiscal year 2007.

Interest Expense, net

Net interest expense for the second quarter of fiscal year 2007 increased $2 million, or 20%,
compared to the prior fiscal year second quarter to $12 million. The increase was primarily due to
a decrease in our average cash balance as well as higher borrowings under the credit facility
associated with our $1 billion tender offer.

Net interest expense for the first six months of fiscal year 2007 increased $1 million, or 5%,
compared to the prior fiscal year comparable period to $20 million. The increase was due to the
same factors as those discussed above and was partly offset by lower interest expense on the 6.375%
Senior Notes which were repaid in April 2005.

Income Taxes

Income tax expense (benefit) for the three and six-month periods ended September 30, 2006 was $13
million and $21 million, respectively, compared to the three and six-month periods ended September
30, 2005 of $1 million and ($5) million, respectively. For the quarter ended September 30, 2006,
the tax provision included a net benefit of approximately $10 million, primarily arising from the
resolution of certain state and international tax contingencies. For the six-month period ending
September 30, 2006, the tax provision included a net benefit of
approximately $17 million, primarily
arising from the resolution of certain international and U.S. tax contingencies.

For the quarter ended September 30, 2005, the tax provision included a net benefit of approximately
$14 million, primarily arising from the conclusion of an international tax examination and the
reduction of a valuation allowance related to foreign net operating loss carry forwards. In
addition to the aforementioned $14 million benefit, the six-month period ended September 30, 2005
included a net benefit of approximately $36 million reflecting IRS Notice 2005-38. Notice 2005-38
permitted the utilization of foreign tax credits in calculating the special one-time dividends
received deduction on repatriating funds as provided by the American Jobs Creation Act of 2004.

We are subject to tax in many jurisdictions and a certain degree of estimation is required in
recording assets and liabilities related to income taxes. We believe that adequate provision has
been made for any adjustments that may result from tax examinations. The outcome of tax
examinations, however, cannot be predicted with

certainty as tax matters could be subject to
differing interpretations of applicable tax laws and regulations as they relate to the amount,
timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given
audit cycle. Should any issues addressed in our tax audits be resolved in a manner not consistent
with managements expectations, we could be required to adjust the provision for income tax in the
period such resolution occurs.

LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents and marketable securities totaled $1.30 billion at September 30, 2006, a
decrease of $0.57 billion from the March 31, 2006 balance of $1.87 billion. Compared to rates at
March 31, 2006, cash
and cash equivalents increased by approximately $28 million due to the positive effect that foreign
currency exchange rates had on cash during the first six months of fiscal year 2007.

Sources and Uses of Cash

Cash (used
in) generated from operating activities for the six months ended September 30, 2006 and
2005 was $(40) million and $392 million, respectively. In the first six months of fiscal year
2007, cash used in operating activities was negatively impacted by changes in working capital,
including an increase in the accounts receivable cycle and a decline in the accounts payable cycle.
For the six months ended September 30, 2006, accounts receivable, net of deferred revenue and
maintenance, increased approximately $58 million, compared to a decline in the comparable prior
year period of $70 million. This increase was primarily attributed to an increase in the accounts
receivable cycle which we do not believe will represent a trend for future periods. Accounts
payable, accrued expenses and other liabilities declined approximately $112 million compared to an
increase in the comparable prior year period of $62 million. The decline in the accounts payable
cycle was related to managements determination that its payable cycle had exceeded an optimal
level and that it should be reduced. Other factors contributing to the decline in cash from
operations included higher expenses and the timing of fiscal 2007 contributions to the CA Savings
Harvest Plan, a 401(k) plan, which were not pre-funded in fiscal year 2006.

The Companys estimate of the fair value of net installment accounts receivable recorded under the
prior business model approximates carrying value. Amounts due from customers under our business
model are offset by deferred subscription value related to these license agreements, leaving no or
minimal net carrying value on the balance sheet for such amounts. The fair value of such amounts
may exceed this carrying value but cannot be practically assessed since there is no existing market
for a pool of customer receivables with contractual commitments similar to those owned by us. The
actual fair value may not be known until these amounts are sold, securitized or collected. Although
these customer license agreements commit the customer to payment under a fixed schedule, the
agreements are considered executory in nature due to the ongoing commitment to provide unspecified
future products as part of the agreement terms.

Under our business model, we can estimate the total amounts to be billed and/or collected at the
conclusion of a reporting period. For current business model contracts, amounts we expect to bill
within the next fiscal year at September 30, 2006 decreased by approximately $40 million to
approximately $1.64 billion from the end of the prior fiscal year. Amounts we expect to bill for
periods after 12 months declined by $68 million to $1.17 billion. These declines are due to a
combination of the timing of customer payments and renewals of existing contracts. The estimated
amounts expected to be collected and a reconciliation of such amounts to the amounts we recorded as
accounts receivable are as follows:

The reduced aggregate deferred
subscription value balance at September 30, 2006 as compared to
March 31, 2006 is due principally to reduced bookings in the second quarter of fiscal year 2007
relative to the fourth quarter of fiscal year 2006. This decline is principally due to the
expected trend of our bookings cycle, as historically, our bookings have been lower in the first
half of a fiscal year as compared to the second half of our fiscal year. The fourth quarter has
generally been our highest bookings quarter for any given fiscal year.

Approximately 9% of the total deferred subscription value balance of approximately $4.97 billion at
September 30, 2006 is associated with multi-year contracts signed with the U.S. Federal Government
and other U.S. state and local governmental agencies that are generally subject to annual fiscal
funding approval and/or may be terminated at the convenience of the government. While funding
under these contracts is not assured, we do not believe any circumstances exist which might
indicate that such funding will not be approved and paid in accordance with the terms of our
contracts. For any contracts with governmental agencies who are first-time customers that are
subject to annual fiscal funding approval, we generally do not record the deferred subscription
value for the unbilled portion of the contract until the funding is approved. We also receive
contracts from non-U.S. governmental agencies that contain similar provisions. The total balance
of deferred subscription value related to non-U.S. governmental agencies that may be terminated at
the convenience of the agencies is not material to the overall deferred subscription value balance.

Other sources and uses of cash for the first six months of fiscal year 2007 included net proceeds
from the sale-leaseback of the Companys headquarters in Islandia, New York for $201 million, sales
of marketable securities for $44 million, and the sale-leaseback of certain IT equipment for $15
million. In addition, the Company repurchased approximately 41 million shares of its common stock
under a tender offer in September 2006 which was funded with approximately $240 million of existing
cash and $750 million in new borrowings under the revolving credit facility. The Company paid $173
million, net of cash acquired, for the acquisition of four companies in fiscal year 2007.

First Six Months of Fiscal Year 2007 versus Fiscal Year 2006 Comparison

Operating Activities:

Cash used in operating activities for the first six months of fiscal year 2007 was $40 million,
representing a decline of approximately $432 million compared to the prior year period. The
decline was driven primarily by higher disbursements to vendors and higher payroll related
disbursements of approximately $351 million in the aggregate and lower collections of approximately $95
million, primarily due to an increase in the receivables cycle, partially offset by a $75 million
restitution fund payment in the second quarter of fiscal year 2006 that did not recur in the second
quarter of fiscal year 2007. The higher payroll related disbursements were primarily the result of
increased personnel costs from acquisitions as well as higher

payments for commissions due to
increased commission costs in the fourth quarter of fiscal year 2006 as compared to the prior year
period.

Investing Activities:

Cash used in investing activities for the first six months of fiscal year 2007 was $35 million
compared to $485 million for the prior year period. The reduction in cash used in investing
activities was primarily related to a reduction of $453 million in amounts paid for acquisitions,
net of cash acquired, and the net proceeds from the sale-leaseback of the Companys corporate
headquarters in Islandia, New York of $201 million. Partially offsetting this was a reduction in
proceeds received from the sale of marketable securities of $218 million.

Financing Activities:

Cash used in financing activities for the first six months of fiscal year 2007 was $489 million
compared to $1.14 billion in the comparable prior year period. The reduction is due primarily to
the $911 million repayment of the Companys 6.375% Senior Notes in fiscal year 2006, as well as the
higher volume of shares repurchased in fiscal year 2007 under the tender offer, which was partly
offset by new borrowings under the Companys $1 billion revolving credit facility of $750 million.

Second Quarter Fiscal Year 2007 versus Fiscal Year 2006 Comparison

Operating Activities:

Cash generated by operating activities for the second quarter of fiscal year 2007 was $6 million,
representing a decline of approximately $293 million compared to the prior year period. The
decline was primarily driven by higher disbursements to vendors and higher payroll related
disbursements of approximately $198 million in the aggregate, lower collections of approximately $142
million, primarily due to an increase in the receivables cycle and, to a lesser extent, a 13%
decline in new deferred subscription value in our direct business to $498 million, partially offset
by a $75 million restitution fund payment in the second quarter of fiscal year 2006 that did not
recur in the second quarter of fiscal year 2007. As noted above, the higher payroll related
disbursements were primarily the result of increased personnel costs from acquisitions.

Investing Activities:

Cash generated by investing activities for the second quarter of fiscal year 2007 was $112 million
compared to cash used in investing activities of $284 million for the prior year period. The
increase in cash from investing activities was primarily due to a reduction of $224 million in
amounts paid for acquisitions, net of cash acquired, and the net proceeds from the sale-leaseback
of the Companys corporate headquarters in Islandia, New York of $201 million, partially offset by
a reduction in proceeds received from the sale of marketable securities of $51 million in fiscal
year 2006.

Financing Activities:

Cash used in financing activities for the second quarter of fiscal year 2007 was $315 million
compared to $256 million in the comparable prior year period. The increase in cash used was
primarily due to an $881 million increase in purchases of common stock due to the Companys $1
billion tender offer, partially offset by new borrowings under the revolving credit facility of
$750 million.

As of September 30, 2006 and March 31, 2006, our debt arrangements consisted of the following:

September 30, 2006

March 31, 2006

Maximum

Outstanding

Maximum

Outstanding

Available

Balance

Available

Balance

(in millions)

Debt
Arrangements:

2004 Revolving Credit Facility (expires
December 2008)

$

1,000

$

750

$

1,000

$



6.500% Senior Notes due April 2008



350



350

4.750% Senior Notes due December 2009



500



500

1.625% Convertible Senior Notes due December 2009



460



460

5.625% Senior Notes due December 2014



500



500

International line of credit

5



5



Capital lease obligations and other



28



6

Total

$

2,588

$

1,816

2004 Revolving Credit Facility

In December 2004, we entered into an unsecured, revolving credit facility (the 2004 Revolving
Credit Facility). The maximum committed amount available under the 2004 Revolving Credit Facility
is $1 billion, exclusive of incremental credit increases of up to an additional $250 million which
are available subject to certain conditions and the agreement of our lenders. The 2004 Revolving
Credit Facility expires December 2008 and $750 million was drawn as of September 30, 2006. No
amounts were drawn as of March 31, 2006.

We drew down $750 million in September 2006 in order
to finance the $1 billion tender offer, which
is further described in the Statements of Cash Flows section of Note A, Basis of Presentation in
this Quarterly Report on Form 10-Q. Borrowings under the 2004 Revolving Credit Facility bear
interest at a rate dependent on our credit ratings at the time of such borrowings and are
calculated according to a base rate or a Eurocurrency rate, as the case may be, plus an applicable
margin and utilization fee. The Companys current borrowing rate is 6.54%. Depending on our
credit rating at the time of borrowing, the applicable margin can range from 0% to 0.325% for a
base rate borrowing and from 0.50% to 1.325% for a Eurocurrency borrowing, and the utilization fee
can range from 0.125% to 0.250%. Based on our credit ratings as of October 2006, the applicable
margin is 0.025% for a base rate borrowing and 1.025% for a Eurocurrency borrowing, and the
utilization fee is 0.125%. In addition, we must pay facility fees quarterly at rates dependent on
our credit ratings. The facility fees can range from 0.125% to 0.30% of the aggregate amount of
each lenders full revolving credit commitment (without taking into account any outstanding
borrowings under such commitments). Based on our credit ratings as of October 2006, the facility
fee is 0.225% of the aggregate amount of each lenders revolving credit commitment.

The 2004 Revolving Credit Facility contains customary covenants for transactions of this type,
including two financial covenants: (i) for the 12 months ending each quarter-end, the ratio of
consolidated debt for borrowed money to consolidated cash flow, each as defined in the 2004
Revolving Credit Facility, must not exceed 4.00 for the quarters ending September 30, 2006 and thereafter; and (ii)
for the 12 months ending each quarter-end, the ratio of consolidated cash flow to the sum of
interest payable on, and amortization of debt discount in respect of, all consolidated debt for
borrowed money, as defined in the 2004 Revolving Credit Facility, must not be less than 5.00. In
addition, as a condition precedent to each borrowing made under the 2004 Revolving Credit Facility,
as of the date of such borrowing, (i) no event of default shall have occurred and be continuing and
(ii) we are to reaffirm that the representations and warranties made in the 2004 Revolving Credit
Facility (other than the representation with respect to material adverse changes, but including the
representation regarding the absence of certain material litigation) are correct. As of November
3, 2006, we are in compliance with these debt covenants.

In fiscal year 1999, the Company issued $1.75 billion of unsecured Senior Notes in a transaction
pursuant to Rule 144A under the Securities Act of 1933 (Rule 144A). Amounts borrowed, rates, and
maturities for each issue were $575 million at 6.25% due April 15, 2003, $825 million at 6.375% due
April 15, 2005, and $350 million at 6.5% due April 15, 2008. In April 2005, the Company repaid the
$825 million remaining balance of the 6.375% Senior Notes from available cash balances. As of
September 30, 2006, $350 million of the 6.5% Senior Notes remained outstanding.

Fiscal Year 2005 Senior Notes

In November 2004, the Company issued an aggregate of $1 billion of unsecured Senior Notes (2005
Senior Notes) in a transaction pursuant to Rule 144A. The Company issued $500 million of 4.75%,
5-year notes due December 2009 and $500 million of 5.625%, 10-year notes due December 2014. The
Company used the net proceeds from this issuance to repay debt. The Company has the option to
redeem the 2005 Senior Notes at any time, at redemption prices equal to the greater of (i) 100% of
the aggregate principal amount of the notes of such series being redeemed and (ii) the present
value of the principal and interest payable over the life of the 2005 Senior Notes, discounted at a
rate equal to 15 basis points and 20 basis points for the 5-year notes and 10-year notes,
respectively, over a comparable U.S. Treasury bond yield. The maturity of the 2005 Senior Notes may
be accelerated by the holders upon certain events of default, including failure to make payments
when due and failure to comply with covenants in the 2005 Senior Notes. The 5-year notes were
issued at a price equal to 99.861% of the principal amount and the 10-year notes at a price equal
to 99.505% of the principal amount for resale under Rule 144A and Regulation S. The Company also
agreed for the benefit of the holders to register the 2005 Senior Notes under the Securities Act of
1933 pursuant to a registered exchange offer so that the 2005 Senior Notes may be sold in the
public market. Because the Company did not meet certain deadlines for completion of the exchange
offer, the interest rate on the 2005 Senior Notes increased by 25 basis points as of September 27,
2005 and increased by an additional 25 basis points as of December 26, 2005 since the delay was not
cured prior to that date. Upon the earlier to occur of (i) the completion of the exchange offer
and (ii) November 18, 2006 (when the 2005 Senior Notes may be sold without restriction under Rule
144), such additional interest on the 2005 Senior Notes will no longer be payable.

1.625% Convertible Senior Notes

In fiscal year 2003, the Company issued $460 million of unsecured 1.625% Convertible Senior Notes
(1.625% Notes), due December 15, 2009, in a transaction pursuant to Rule 144A. The 1.625% Notes
are senior unsecured indebtedness and rank equally with all existing senior unsecured indebtedness.
Concurrent with the issuance of the 1.625% Notes, we entered into call spread repurchase option
transactions to partially mitigate potential dilution from conversion of the 1.625% Notes. For
further information, refer to Note 6, Debt, in the Notes to the Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2006.

3% Concord Convertible Notes

In connection with our acquisition of Concord in June 2005, we assumed $86 million in 3%
convertible senior notes due 2023. In accordance with the notes terms, we redeemed (for cash) the
notes in full in July 2005.

International Line of Credit

An unsecured and uncommitted multi-currency line of credit is available to meet short-term working
capital needs for our subsidiaries operating outside the United States. The line of credit is
available on an offering basis, meaning that transactions under the line of credit will be on such
terms and conditions, including interest rate, maturity, representations, covenants and events of
default, as mutually agreed between our subsidiaries and the local bank at the time of each
specific transaction. As of September 30,

2006, this line totaled approximately $5 million and approximately $3 million was pledged in
support of bank guarantees. Amounts drawn under these facilities as of September 30, 2006 were
minimal.

In addition to the above facility, our foreign subsidiaries use guarantees issued by commercial
banks to guarantee performance on certain contracts. At September 30, 2006, the aggregate amount
of significant guarantees outstanding was approximately $2 million, none of which had been drawn
down by third parties.

Effect of Exchange Rate Changes

There was a $28 million favorable impact
to our cash balance in the first six months of fiscal year
2007, predominantly due to the strengthening of the British pound and
the euro against the U.S. dollar.
This is compared to a negative impact of approximately $68 million in the comparable prior year
period, which was predominantly due to the weakening of the British pound and the euro against the
U.S. dollar.

Other Matters

As of October 2006, our senior unsecured notes are rated Ba1, BB+ and BB by Moodys Investor
Services, Fitch Rating, and Standard and Poors, respectively. The outlook on these unsecured
notes is negative by all three rating agencies. Peak borrowings under all debt facilities during
the second quarter of fiscal year 2007 totaled approximately $2.59 billion, with a weighted average
interest rate of 5.4%.

Our capital resource requirements as of September 30, 2006 consisted of lease obligations for office
space, equipment, mortgage and loan obligations, our ERP implementation, and amounts due as a
result of product and company acquisitions.

It is expected that existing cash, cash equivalents, the availability of borrowings under existing
and renewable credit lines and in the capital markets, and cash expected to be provided from
operations will be sufficient to meet ongoing cash requirements.

We expect to use existing cash balances and future cash generated from operations to fund financing
activities such as the repayment of our debt balances as they mature as well as the repurchase of
shares of common stock and the payment of dividends as approved by our Board of Directors. Cash
generated will also be used for investing activities such as future acquisitions as well as
additional capital spending, including our continued investment in our ERP implementation.

This outlook for fiscal year 2007 contains certain forward looking statements and information
relating to us that are based on the beliefs and assumptions made by management, as well as
information currently available to management. Should business conditions change or should our
assumptions prove incorrect, actual results may vary materially from those described below. We do
not intend to update these forward looking statements.

This outlook is also premised on the assumption that there will be limited-to-modest improvements
in the current economic and IT environments. We also believe that customers will continue to be
cautious with their technology purchases.

We expect to meet or exceed our revenue guidance of $3.9 billion, while earnings per share
will be below our original outlook of $0.44 per share as the total projected restructuring costs
for fiscal year 2007 and the related savings under the FY07 Plan are yet to be determined. The
Company also expects to generate cash from operations of between $900 million and $1 billion, which
is down from our original estimate of $1.3 billion due to lower than expected growth in bookings
for the full fiscal year, borrowing costs associated with the tender offer and payments related to
the FY07 Plan.

This outlook assumes:



Our sales force will perform as expected and the substantial changes in the
structure of our sales force and our fiscal year 2007 sales commission plan will drive
growth in new deferred subscription value in the second half of the fiscal year;



Improvement in collections due to a reduction in our receivables cycle will be
achieved;



Actions that management has undertaken will reduce commission costs for fiscal year
2007 as compared to fiscal year 2006;



Cash generated from operations will be negatively impacted by an additional $200
million in tax payments, higher disbursements due to a decline in the days payable
cycle which primarily occurred in the first half of fiscal year 2007 and lower
collections from contracts with accelerated payment terms;



We will incur approximately $105 million (pre-tax) in non-cash stock-based
compensation charges in connection with SFAS No. 123(R)
(we incurred approximately $99
million of total stock-based compensation charges in fiscal year 2006); and

A detailed discussion of our critical accounting policies and the use of estimates in applying
those policies is included in our Annual Report on Form 10-K for the year ended March 31, 2006. In
many cases, a high degree of judgment is required, either in the application and interpretation of
accounting literature or in the development of estimates that impact our financial statements.
These estimates may change in the future if underlying assumptions or factors change. The
following is a summary of the critical accounting policies for which estimates were updated as of
September 30, 2006.

Revenue Recognition

We generate revenue from the following primary sources: (1) licensing software products; (2)
providing customer technical support (referred to as maintenance); and (3) providing professional
services, such as consulting and education.

We recognize revenue pursuant to the requirements of Statement of Position 97-2 Software Revenue
Recognition (SOP 97-2), issued by the American Institute of Certified Public Accountants, as
amended by SOP 98-9 Modification of SOP 97-2, Software Revenue Recognition, With Respect to
Certain Transactions. In accordance with SOP 97-2, we begin to recognize revenue from licensing
and supporting our software products when all of the following criteria are met: (1) we have
evidence of an arrangement with a customer; (2) we deliver the products; (3) license agreement
terms are deemed fixed or determinable and free of contingencies or uncertainties that may alter
the agreement such that it may not be complete and final; and (4) collection is probable.

Our software licenses generally do not include acceptance provisions. An acceptance provision
allows a customer to test the software for a defined period of time before committing to license
the software. If a license agreement includes an acceptance provision, we do not record deferred
subscription value or recognize revenue until the earlier of the receipt of a written customer
acceptance or, if not notified by the customer to cancel the license agreement, the expiration of
the acceptance period.

Under our business model, software license agreements include flexible contractual provisions that,
among other things, allow customers to receive unspecified future software products for no
additional fee. These agreements combine the right to use the software product with maintenance for
the term of the agreement. Under these agreements, we recognize revenue ratably over the term of
the license agreement beginning upon completion of the four SOP 97-2 recognition criteria noted
above. For license agreements signed prior to October 2000 (the prior business model), once all
four of the above noted revenue recognition criteria were met, software license fees were
recognized as revenue up-front, and the maintenance fees were deferred and subsequently recognized
as revenue over the term of the license. New deferred subscription value related to acquisitions
is initially recorded on the acquired companys systems
generally under a perpetual or up-front software license agreement
model, and is typically converted to our ratable software license agreement model within the first fiscal year after the
acquisition. As these contracts are renewed under our business model, revenue is recognized
ratably as subscription revenue on a monthly basis over the term of the agreement.

Maintenance revenue is derived from two primary sources: (1) combined license and maintenance
agreements recorded under the prior business model; and (2) certain stand-alone maintenance
agreements.

Under the prior business model, maintenance and license fees were generally combined into a single
license agreement. The maintenance portion was deferred and amortized into revenue over the initial
license agreement term. Some of these license agreements have not reached the end of their initial
terms and, therefore, continue to amortize. This amortization is recorded on the Maintenance line
item on the Consolidated Condensed Statements of Operations. The deferred maintenance portion,
which was optional to the customer, was determined using its fair value based on annual, fixed
maintenance renewal rates stated in the agreement. For license agreements entered into under our
current business model, maintenance and license fees continue to be combined; however, the
maintenance is inclusive for the entire term. We report

such combined fees on the Subscription revenue line item on the Consolidated Condensed Statements
of Operations.

We also record certain stand-alone maintenance revenue earned from customers who elect optional
maintenance. Revenue from such renewals is recognized as maintenance revenue over the term of the
renewal agreement.

Revenue from professional service arrangements is recognized pursuant to the provisions of SOP
97-2, which in most cases is as the services are performed. Revenues from professional services
that are sold as part of a software transaction are deferred and recognized on a ratable basis over
the life of the related software transaction. If it is not probable that a project will be
completed or the payment will be received, revenue is deferred until the uncertainty is removed.

Revenue from sales to distributors, resellers, and VARs is recognized when all four of the SOP 97-2
revenue recognition criteria noted above are met and when these entities sell the software product
to their customers. This is commonly referred to as the sell-through method. Beginning July 1,
2004, sales of our products made by distributors, resellers and VARs to their customers incorporate
the right for the end-users to receive certain upgraded software products at no additional fee.
Accordingly, revenue from those contracts is recognized on a ratable basis.

We have an established business practice of offering installment payment options to customers and
have a history of successfully collecting substantially all amounts due under such agreements. We
assess collectibility based on a number of factors, including past transaction history with the
customer and the creditworthiness of the customer. If, in our judgment, collection of a fee is not
probable, we will not recognize revenue until the uncertainty is removed through the receipt of
cash payment.

Our standard licensing agreements include a product warranty provision for all products. Such
warranties are accounted for in accordance with SFAS No. 5, 
Accounting for Contingencies
. The
likelihood that we would be required to make refunds to customers under such provisions is
considered remote.

Under the terms of substantially all of our license agreements, we have agreed to indemnify
customers for costs and damages arising from claims against such customers based on, among other
things, allegations that our software products infringe the intellectual property rights of a third
party. In most cases, in the event of an infringement claim, we retain the right to (i) procure for
the customer the right to continue using the software product; (ii) replace or modify the software
product to eliminate the infringement while providing substantially equivalent functionality; or
(iii) if neither (i) nor (ii) can be reasonably achieved, we may terminate the license agreement
and refund to the customer a pro-rata portion of the fees paid. Such indemnification provisions are
accounted for in accordance with SFAS No. 5. The likelihood that we would be required to make
refunds to customers under such provisions is considered remote. In most cases and where legally
enforceable, the indemnification is limited to the amount paid by the customer.

Accounts Receivable

The allowance for doubtful accounts is a valuation account used to reserve for the potential
impairment of accounts receivable on the balance sheet. In developing the estimate for the
allowance for doubtful accounts, we rely on several factors, including:



Historical information, such as general collection history of multi-year software agreements;



Current customer information/events, such as extended delinquency, requests for restructuring, and filing for bankruptcy;

The allowance is comprised of two components: (a) specifically identified receivables that are
reviewed for impairment when, based on current information, we do not expect to collect the full
amount due from the customer; and (b) an allowance for losses inherent in the remaining receivable
portfolio based on the analysis of the specifically reviewed receivables.

We expect the allowance for doubtful accounts to continue to decline as net installment accounts
receivable under the prior business model are billed and collected. Under our business model,
amounts due from customers are offset by deferred subscription value (unearned revenue) related to
these amounts, resulting in little or no carrying value on the balance sheet. Therefore, a smaller
allowance for doubtful accounts is required.

Sales Commissions

We accrue sales commissions based on, among other things, estimates of how our sales personnel have
performed against specified annual sales quotas. These estimates involve assumptions regarding the
Companys projected new product sales and billings. All of these assumptions reflect our best
estimates, but these items involve uncertainties, and as a result, if other assumptions had been
used in the period, sales commission expense could have been impacted for that period. Under our
current sales compensation model, during periods of high growth and sales of new products relative
to revenue in that period, the amount of sales commission expense attributable to the license
agreement would be recognized fully in the period and could negatively impact income and earnings
per share in that period, particularly in the second half of the fiscal year when new contract
values are traditionally higher than in the first half.

In our Annual Report on Form 10-K for fiscal
year 2006, we reported that commissions for 2006 were higher than anticipated, primarily due to a
new sales commission plan for fiscal year 2006 that did not appropriately align commission payments
with our overall performance. Also, as set forth below in Item 4, at the end of fiscal year 2006,
we had a material weakness in our internal control over financial reporting due to ineffective
policies and procedures relating to controls over the accounting for sales commissions.
Specifically, we did not effectively estimate, record and monitor our sales commissions
and related accruals. While the material weakness in the Companys internal control over financial
reporting related to accounting for commissions has not been fully remediated, since the close of fiscal
year 2006, we have made changes to the Incentive Compensation Plan for fiscal year 2007 and related processes
for the purpose of improving our ability to effectively estimate, accrue for, calculate, monitor, and timely
pay sales commissions, and to control overall commission expense.
We have simplified the Incentive Compensation Plan by, among other things, in April 2006,
on a worldwide basis, reducing accelerators in the plan (under which sales employees are paid
commissions at higher rates when they reach certain levels of quota achievement) and simplifying
some of the metrics on which quotas are based. Effective in October 2006, in North America and
Latin America we reduced the number of people and functions being paid on commissions, eliminated
certain multipliers in the plan (under which cash bonuses were awarded to encourage certain types of
sales activity), and adopted further changes in the metrics on which commissions are based in order in
part to drive the sale of new products and solutions to new and existing customers. The Incentive
Compensation Plan remains subject to evaluation and modification. We have also made process
improvements in regard to calculating, recording, accruing for, and effecting payment of and
reconciling commissions related accounting transactions. Our efforts to improve our commissions-related
processes are ongoing. Refer to Item 4, Controls and
Procedures, for additional information on our
remediation plans. Refer also to Part II, Item 1a, Risk
Factors, for additional information on risks
associated with changes in the Incentive Compensation Plan and other changes affecting our sales force.

The 2007 sales commissions plan has been modified and will continue to be evaluated during the
current fiscal year. While revised, the plan is still subject to risks similar to those identified
in our Annual Report on Form 10-K for fiscal year 2006, including the risk that, as in fiscal year
2006, commissions expense could be higher than anticipated. As set forth below in Item 4, at the
end of fiscal year 2006, we had a material weakness in our internal control over financial
reporting due to ineffective policies and procedures relating to controls over the accounting for
sales commissions. Specifically, we did not

effectively estimate, record and monitor our sales commissions and related accruals. While we have
started the process of remediating this material weakness, the material weakness in the Companys
internal control over financial reporting related to accounting for commissions persists and has
not been fully remediated. Refer to Item 4, Controls and Procedures, for additional information
on our remediation plans.

Income Taxes

When we prepare our consolidated condensed financial statements,
we estimate our income taxes in
each jurisdiction in which we operate. We record this amount as a provision for taxes in
accordance with SFAS No. 109, 
Accounting for Income Taxes
. This process requires us to estimate
our actual current tax liability in each jurisdiction; estimate differences resulting from
differing treatment of items for financial statement purposes versus tax return purposes (known as
temporary differences), which result in deferred tax assets and liabilities; and assess the
likelihood that our deferred tax assets and net operating losses will be recovered from future
taxable income. If we believe that recovery is not likely, we establish a valuation allowance. We
have recognized as a deferred tax asset a portion of the tax benefits connected with losses related
to operations. As of September 30, 2006, our gross deferred tax assets, net of a valuation
allowance, totaled $781 million. Realization of these deferred tax assets assumes that we will be
able to generate sufficient future taxable income so that these assets will be realized. The
factors that we consider in assessing the likelihood of realization include the forecast of future
taxable income and available tax planning strategies that could be implemented to realize the
deferred tax assets.

Deferred tax assets result from acquisition expenses, such as duplicate facility costs, employee
severance and other costs that are not deductible until paid, net operating losses (NOLs) and
temporary differences between the taxable cash payments received from customers and the ratable
recognition of revenue in accordance with GAAP. The NOLs expire between fiscal years 2007 and 2027.
Additionally, approximately $57 million of the valuation allowance at both September 30, 2006 and
March 31, 2006, is attributable to acquired NOLs which are subject to annual limitations under IRS
Code Section 382. Future results may vary from these estimates.

We believe that adequate accruals have been made for contingencies related to income taxes, and
have classified these in current and long-term liabilities based upon our estimate of when the
ultimate resolution of the contingent liability will occur. The ultimate resolution of the
contingent liabilities will take place upon the earlier of (i) the settlement date with the
applicable taxing authorities or (ii) the date when the tax authorities are statutorily prohibited
from adjusting the Companys tax computations. Any difference between the amount accrued and the
ultimate settlement amount if any, will be released to income or recorded as a reduction of
goodwill depending upon whether the liability was initially recorded in purchase accounting.

Goodwill, Capitalized Software Products, and Other Intangible Assets

SFAS No. 142, 
Goodwill and Other Intangible Assets
, requires an impairment-only approach to
accounting for goodwill. Absent any prior indicators of impairment, we perform an annual impairment
analysis during the fourth quarter of our fiscal year. We performed our annual assessment for
fiscal year 2006 and concluded that there were no impairments to record.

The SFAS No. 142 goodwill impairment model is a two-step process. The first step is used to
identify potential impairment by comparing the fair value of a reporting unit with its net book
value (or carrying amount), including goodwill. If the fair value exceeds the carrying amount,
goodwill of the reporting unit is considered not impaired and the second step of the impairment
test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second
step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.
The second step of the goodwill impairment test compares the implied fair value of the reporting
units goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting
units goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized
in an amount equal to that excess. The implied fair value of goodwill is determined in the same

manner as the amount of goodwill recognized in a business combination. That is, the fair value of
the reporting unit is allocated to all of the assets and liabilities of that unit (including any
unrecognized intangible assets) as if the reporting unit had been acquired in a business
combination and the fair value of the reporting unit was the purchase price paid to acquire the
reporting unit.

Determining the fair value of a reporting unit under the first step of the goodwill impairment
test, and determining the fair value of individual assets and liabilities of a reporting unit
(including unrecognized intangible assets) under the second step of the goodwill impairment test,
is judgmental in nature and often involves the use of significant estimates and assumptions. These
estimates and assumptions could have a significant impact on whether an impairment charge is
recognized and the magnitude of any such charge. Estimates of fair value are primarily determined
using discounted cash flow and are based on our best estimate of future revenue and operating costs
and general market conditions. These estimates are subject to review and approval by senior
management. This approach uses significant assumptions, including projected future cash flow, the
discount rate reflecting the risk inherent in future cash flow, and a terminal growth rate.

The carrying value of capitalized software products, both purchased software and internally
developed software, and other intangible assets, are reviewed on a regular basis for the existence
of internal and external facts or circumstances that may suggest impairment. The facts and
circumstances considered include an assessment of the net realizable value for capitalized software
products and the future recoverability of cost for other intangible assets as of the balance sheet
date. It is not possible for us to predict the likelihood of any possible future impairments or, if
such an impairment were to occur, the magnitude thereof.

Accounting for Business Combinations

The allocation of purchase price for acquisitions requires extensive use of accounting estimates
and judgements to allocate the purchase price to the identifiable tangible and intangible assets
acquired, including in-process research and development, and liabilities assumed based on their
respective fair values.

Product Development and Enhancements

We account for product development and enhancements in accordance with SFAS No. 86, 
Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed
. SFAS No. 86 specifies
that costs incurred internally in researching and developing a computer software product should be
charged to expense until technological feasibility has been established for the product. Once
technological feasibility is established, all software costs are capitalized until the product is
available for general release to customers. Judgment is required in determining when technological
feasibility of a product is established and assumptions are used that reflect our best estimates.
If other assumptions had been used in the current period to estimate technological feasibility, the
reported product development and enhancement expense could have been impacted. Annual amortization
of capitalized software costs is the greater of the amount computed using the ratio that current
gross revenues for a product bear to the total of current and anticipated future gross revenues for
that product or the straight-line method over the remaining estimated economic life of the software
product, generally estimated to be five years from the date the product reached technological
feasibility. The Company amortized capitalized software costs using the straight-line method in
fiscal year 2006 and through the second quarter of fiscal year 2007, as anticipated future revenue
is projected to increase for several years considering the Company is continuously integrating
current software technology into new software products.

Accounting for Share-Based Compensation

We currently maintain share-based compensation plans. We use the Black-Scholes option-pricing model
to compute the estimated fair value of certain stock-based awards. The Black-Scholes model includes
assumptions regarding dividend yields, expected volatility, expected lives, and risk-free interest
rates. These assumptions reflect our best estimates, but these items involve uncertainties based on
market and other conditions outside of our control. As a result, if other assumptions had been
used, stock-based compensation expense could have been materially impacted. Furthermore, if
different assumptions are used in future periods, stock-based compensation expense could be
materially impacted in future years.

As described in Note D, Accounting for Share-based Compensation, in the Notes to the Consolidated
Condensed Financial Statements, performance share units (PSUs) are awards under the long-term
incentive plan for senior executives where the number of shares or restricted shares as applicable,
ultimately received by the employee depends on Company performance measured against specified
targets and will be determined after a three-year or one-year period as applicable. The fair value
of each award is estimated on the date that the performance targets are established based on the
fair value of the Companys stock and the Companys estimate of the level of achievement of its
performance targets. The Company is required to recalculate the fair value of issued PSUs each
reporting period until they are granted. The adjustment is based on the fair value of the
Companys stock on the reporting period date. Each quarter, the Company compares the
actual performance the Company expects to achieve with the performance targets.

Legal Contingencies

We are currently involved in various legal proceedings and claims. Periodically, we review the
status of each significant matter and assess our potential financial exposure. If the potential
loss from any legal proceeding or claim is considered probable and the amount can be reasonably
estimated, we accrue a liability for the estimated loss. Significant judgment is required in both
the determination of probability of a loss and the determination as to whether an exposure is
reasonably estimable. Due to the uncertainties related to these matters, accruals are based only on
the best information available at the time. As additional information becomes available, we
reassess the potential liability related to our pending litigation and claims, and may revise our
estimates. Such revisions could have a material impact on our results of operations and financial
condition. Refer to Note J, Commitments and Contingencies, in the Notes to the Consolidated
Condensed Financial Statements for a description of our material legal proceedings.

New Accounting Standards

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48 (FIN
48), 
Accounting for Uncertainty in Income Taxes
, which clarifies the accounting for uncertainty
in income taxes recognized in the financial statements in accordance with FASB Statement No. 109,

Accounting for Income Taxes
. FIN 48 provides guidance relative to the recognition, derecognition
and measurement of tax positions for financial statement purposes. The standard also required
expanded disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006. We
are currently evaluating the impact of this standard on our Consolidated Condensed Financial
Statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) 157, 
Fair
Value Measurements
. SFAS No. 157 defines fair value, establishes a framework for measuring fair
value in U.S. generally accepted accounting principles (GAAP) and expands disclosures about fair
value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years. We are currently evaluating the impact of this
standard on our Consolidated Condensed Financial Statements.

In September 2006, the SEC issued Staff
Accounting Bulletin (SAB) 108,
Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial
Statements.
SAB 108 provides interpretive guidance on how registrants should quantify
financial statement misstatements. There is currently diversity in practice,
with the two commonly used methods to quantify misstatements being
the rollover
method (which primarily focuses on the income statement impact of misstatements) and
the iron curtain method (which focuses on the balance sheet impact). SAB 108 requires
registrants to use a dual approach whereby both of these methods are considered in
evaluating the materiality of financial statement errors. Prior materiality assessments
will need to be considered using both the rollover and iron curtain methods. SAB 108 is
effective for fiscal years ending on or after November 15, 2006. We do not expect this
Statement to have a material impact on our Consolidated Condensed Financial Statements.

Our exposure to market rate risk for changes in interest rates relates primarily to our investment
portfolio, debt, and installment accounts receivable. We have a prescribed methodology whereby we
invest our excess cash in liquid investments that are comprised of money market funds and debt
instruments of government agencies and high-quality corporate issuers (Standard & Poors single A
rating and higher). To mitigate risk, many of the securities have a maturity date within one year,
and holdings of any one issuer, excluding the U.S. government, do not exceed 10% of the portfolio.
Periodically, the portfolio is reviewed and adjusted if the credit rating of a security held has
deteriorated.

As of September 30, 2006, our outstanding debt approximated $2.59 billion, most of which was in
fixed rate obligations. If market rates were to decline, we could be required to make payments on
the fixed rate debt that would exceed those based on current market rates. Each 25 basis point
decrease in interest rates would have an associated annual opportunity cost of approximately $6
million. Each 25 basis point increase or decrease in interest rates would have no material annual
effect on variable rate debt interest based on the balances of such debt as of September 30, 2006.

As of September 30, 2006, we did not utilize derivative financial instruments to mitigate the above
mentioned interest rate risks.

We offer financing arrangements with installment payment terms in connection with our software
license agreements. The aggregate amounts due from customers include an imputed interest element,
which can vary with the interest rate environment. Each 25 basis point increase in interest rates
would have an associated annual opportunity cost of approximately $9 million.

Foreign Currency Exchange Risk

We conduct business on a worldwide basis through subsidiaries in 46 countries and, as such, a
portion of our revenues, earnings, and net investments in foreign affiliates are exposed to changes
in foreign exchange rates. We seek to manage our foreign exchange risk in part through operational
means, including managing expected local currency revenues in relation to local currency costs and
local currency assets in relation to local currency liabilities. In October 2005, the Board of
Directors adopted our Risk Management Policy and Procedures, which authorizes us to manage, based
on managements assessment, our risks/exposures to foreign currency exchange rates through the use
of derivative financial instruments (e.g., forward contracts, options, swaps) or other means. We
have not historically used, and do not anticipate using, derivative financial instruments for
speculative purposes.

Derivatives are accounted for in accordance with U.S. generally accepted accounting principles
(GAAP) and the Statement of Financial Accounting Standards No. 133, 
Accounting for Derivative
Instruments and Hedging Activities
 (SFAS No. 133). For the quarter ended September 30, 2006, we
entered into derivative contracts with a total notional value of approximately 23 million euros.
We entered into these contracts with the intent of mitigating a certain portion of our euro
operating exposure and as part of our on-going risk management program. These contracts did not
qualify for hedge accounting treatment under SFAS No. 133 and did not result in any significant
gains or losses for the quarter. As of September 30, 2006, we had no derivative contracts
outstanding. In October 2006, the Company entered into similar derivative contracts as those
entered during the quarter ended September 30, 2006 relating to the Companys operating exposures.

Equity Price Risk

As of September 30, 2006, we do not hold significant investments in marketable equity securities of
publicly traded companies. Our investments in marketable securities were considered
available-for-sale with any unrealized gains or losses deferred as a component of stockholders
equity.

The Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the Companys reports under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SECs rules and forms,
and that such information is accumulated and communicated to management, including the Companys
Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. The Companys management, with participation of the Companys Chief
Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of
the Companys disclosure controls and procedures (as defined in the Securities Exchange Act of 1934
Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form
10-Q.

As previously disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended March
31, 2006, the Company determined that, as of the end of the fiscal year 2006, there were material
weaknesses affecting its internal control over financial reporting and, as a result of those
material weaknesses, the Companys disclosure controls and procedures were not effective. As
described below, the Company is in the process of remediating those material weaknesses.
Consequently, based on the evaluation described above, the Companys management, including its
Chief Executive Officer and Chief Financial Officer, have concluded that, as of the end of the
second quarter of fiscal year 2007, the Companys disclosure controls and procedures were not
effective.

Changes in internal control over financial reporting

During the first quarter of fiscal year 2007, the Company was engaged in the assessment and
evaluation of its internal control over financial reporting for fiscal year 2006 as described
below. The Company has made changes to its internal control over financial reporting during the
first two quarters of fiscal year 2007 that address these material weaknesses as described below.

Changes under the DPA

As previously reported, and as described more fully in Note J, Commitments and Contingencies, in
the Notes to the Consolidated Condensed Financial Statements, in September 2004 the Company reached
agreements with the USAO and SEC by entering into the DPA with the USAO and by consenting to the
SECs filing of a Final Consent Judgment (Consent Judgment) in the United States District Court for
the Eastern District of New York. The DPA requires the Company to, among other things, undertake
certain reforms that will affect its internal control over financial reporting. These include
implementing a worldwide financial and enterprise resource planning (ERP) information technology
system to improve internal controls, reorganizing and enhancing the Companys Finance and Internal
Audit Departments, and establishing new records management policies and procedures.

The Company believes that these and other reforms, such as procedures to assure proper recognition
of revenue, should enhance its internal control over financial reporting. For more information
regarding the DPA, refer to the Companys Current Report on Form 8-K filed with the SEC on
September 22, 2004 and the exhibits thereto, including the DPA. For more information regarding the
Companys compliance with the DPA and the Consent Judgment, refer to the information under the
heading Status of the Companys Compliance with the Deferred Prosecution Agreement and Final
Consent Judgment in the Companys definitive proxy materials filed on July 26, 2005 and Note J,
Commitments and Contingencies  The Government Investigation, in the Notes to the Consolidated
Condensed Financial Statements.

Changes to remediate material weaknesses

As previously reported in its Annual Report on Form 10-K for fiscal year 2006, the Company
determined that, as of the end of fiscal year 2006, there were material weaknesses in its internal
control over financial reporting relating to (1) an ineffective control environment due to a lack
of effective communication policies and procedures, (2) ineffective policies and procedures
relating to controls over the accounting for sales commissions, (3) ineffective policies and
procedures relating to the identification, analysis and documentation of non-routine tax matters,
(4) ineffective policies and procedures relating to the accounting for and disclosure of
stock-based compensation relating to stock options, and (5) ineffective policies and

procedures designated to identify, quantify and record the impact on subscription revenue when
license agreements have been cancelled and renewed more than once prior to the expiration date of
each successive license agreement. These material weaknesses in our internal control over
financial reporting continue to persist through the current fiscal quarter with the exception of
item (4) above which was remediated during the Companys first quarter of fiscal year 2007.
Accordingly, we plan to implement the procedures and steps noted below to enhance our internal
control over financial reporting and our disclosure controls and procedures so as to remediate
these weaknesses:

(i) Specific remediation actions planned for fiscal year 2007 with respect to our material
weakness in internal control over financial reporting related to an ineffective control environment
due to a lack of effective communication policies and procedures include the following:



Personnel and organizational changes:



Appointments of a new Chief Operating Officer in April 2006, a new
Chief Administrative Officer in June 2006 and a new Chief Financial
Officer in August 2006;



Realignment of reporting of the Chief Financial Officer from Chief
Operating Officer to the Chief Executive Officer in April 2006;



Reorganization of the Sales Function including:



Elimination of the position Executive Vice President Worldwide Sales,
and establishment of direct reporting of the field sales organization
to the Chief Operating Officer in June 2006;



Appointment of a Senior Vice President Sales Operations with direct
reporting to the Chief Operating Officer in June 2006;



Implementation of recurring meetings with representation from key
departments including legal, finance, operations and human resources
to address operating and financial performance, as well as the
identification, tracking and communication of information of potential
significance to financial reporting and disclosure issues began during
the quarter ended September 30, 2006; and



Provision of focused training relating to ethics, the Companys Code
of Conduct and its core values.

(ii) Specific remediation actions planned for fiscal year 2007 with respect to our material
weakness in internal control over financial reporting related to accounting for sales commissions
include the following:



Reviews of commissions accounting procedures by the Internal Audit
Department. The first review was completed during the quarter ended September
30, 2006;



Appointment of a quality review team to assess the adequacy and
efficacy of the business processes, IT Systems and financial oversight
for the administration of sales commissions in April 2006;



Formalization of policies and procedures including communication and
reporting responsibilities among the Companys sales, human resources
and finance functions to ensure that the administration, payments of
and accounting for commissions expense are coordinated;



Reconciliation of commission expense accruals to actual commission
payments on a quarterly basis began during the quarter ended September
30, 2006; and



Creation of a Commission Plan Committee (the Committee) to oversee
changes to the Companys Incentive Compensation Plan and related
processes in order to enhance the Companys ability to monitor, timely
pay, estimate, and accrue for sales commissions began during the
quarter ended September 30, 2006. The Committee provided oversight of
changes to simplify the CA Incentive Compensation Plan that took
effect October 1, 2006.

(iii) Specific remediation actions planned for fiscal year 2007 with respect to our material
weakness in internal control over financial reporting related to the identification, analysis and
documentation of non-routine tax matters include the following:



Review of the tax departments policies and procedures including its use of external advisors;

Establishment of new documentation and analysis requirements for non-routine tax matters to
ensure among other things, that accounting conclusions involving such matters are thoroughly
documented and identify the critical factors that support the basis for such conclusions; and



Formalization of communication and review of non-routine tax matters between the tax function
and senior finance management.

(iv) With respect to our material weakness in internal control over financial reporting related to
the accounting for and disclosure of stock-based compensation relating to stock options issued
prior to fiscal year 2002, the development and implementation of policies and procedures
beginning in fiscal year 2002 have resulted in the timely communication of stock option
grants to employees. During the first quarter of fiscal year 2007, the Company implemented
procedures that resulted in the proper recognition and disclosure of stock-based compensation
expense for stock options issued prior to fiscal year 2002. Accordingly, no further remediation is
deemed necessary with respect to this material weakness.

(v) Specific remediation actions planned for fiscal year 2007 with respect to our material
weakness in internal control over financial reporting related to accounting for subscription
revenue when license agreements have been cancelled and renewed more than once prior to the
expiration date of each successive license agreement include the following:



Formalization of policies and procedures, as well as provision of
training, on the identification, quantification and recording of the
impact on subscription revenue of such license agreements began during
the quarter ended September 30, 2006.

With the exception of item (iv) above, the remediation of the material weaknesses described above
is on-going and the Company intends to continue implementing the steps listed above under the
belief that our efforts, when fully implemented, will be effective in remediating such material
weaknesses. Moreover, management will continue to monitor the results of the remediation
activities and test the new controls as part of our review of our internal control over financial
reporting for fiscal year 2007. We expect that the material weaknesses referenced above will be
fully remediated by the end of fiscal year 2007.

Other changes in internal controls over financial reporting

In the first quarter of fiscal year 2007, the Company began migrating certain financial and sales
processing systems to SAP, an enterprise resource planning (ERP) system, at its North American
operations. This change in information system platform for the Companys financial and operational
systems is part of its on-going project to implement SAP at all of the Companys facilities
worldwide, which is expected to be completed over the next few years. In connection with the SAP
implementation, the Company is updating its internal control over financial reporting, as
necessary, to accommodate modifications to its business and accounting procedures. The Company
believes it is taking the necessary precautions to ensure that the transition to the new ERP system
will not have a negative impact on its internal control environment.

Refer to Note J, Commitments and Contingencies, in the Notes to the Consolidated Condensed
Financial Statements for information regarding legal proceedings.

Item 1a. RISK FACTORS

Current and potential stockholders should consider carefully the risks factors described in more
detail in our Annual Report on Form 10-K for the fiscal year ended March 31, 2006 and as set forth
below. We believe that as of September 30, 2006, there has been no material change to this
information other than as described below. Any of these factors, or others, many of which are
beyond our control, could negatively affect our revenue, profitability and cash flow.

We may update our compensation
plans for the sales organization from time to time in order to align the sales force with
the Companys economic interests. Under the terms of CAs Incentive Compensation Plan
(the Incentive Compensation Plan), management retains broad discretion to change or modify
various aspects of the plan such as sales quotas or territory assignments to ensure that
the plan is aligned with CAs overall business objectives. However, the laws of many of
the countries and states in which CA operates impose limitations on the degree of discretion
a companys management may exercise on compensation matters such as commissions.
Where CA does exercise such discretion to change the Incentive Compensation Plan,
the changes may lead to outcomes that are not anticipated or intended and may impact
our cost of doing business, employee morale, and/or other performance metrics, all of
which could adversely affect our business, financial condition,
operating results and cash flow.

We modified the Incentive Compensation Plan for fiscal year 2006 which led to substantial
unforeseen expenses. Refer to Item 7, Managements Discussion and Analysis of
Financial Condition and Results of OperationsCommissions, Royalties
and Bonuses,
included in the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2006.
For fiscal year 2007, we have made changes in the Incentive Compensation Plan and related processes
which are designed, among other things, to enhance our ability to estimate, accrue for, calculate, monitor,
and control commissions expense, and we have changed the metrics on which commissions are based in order in
part to drive the sale of new product solutions to new and existing customers. For a further description of
these changes, see Item 2, Managements Discussion and Analysis of Financial Condition and Results of
OperationsCritical Accounting Policies and Business PracticesSales
Commissions. While we believe the
changes we have made in the Incentive Compensation Plan and related processes have reduced the risk that
commissions for fiscal year 2007 will be greater than anticipated, there is no assurance that the risk
has been eliminated. Also, the changes we have made in the Incentive Compensation Plan and processes
may impact our cost of doing business, employee morale, and/or other performance metrics, all of which
could adversely affect the performance of our sales force and thus our business, financial condition,
operating results and cash flow. Refer to Item 9A, Controls
and Procedures, included in the Companys
Annual Report on Form 10-K for the fiscal year ended March 31, 2006 for additional information relating
to the Companys identification of a material weakness associated with sales commissions for fiscal year 2006.

In addition to making substantial changes to the Incentive Compensation Plan during fiscal year
2007, we have also made substantial changes to our sales organization and sales coverage model.
Refer to Item 2, Managements Discussion and Analysis of Financial Condition and Results of
OperationsExpenses

Commissions,
Royalties and Bonuses. The purpose of these changes is to enable the Company to
increase its sales of new products and solutions to new and existing customers while protecting the
Companys installed base. In addition, these changes require our
sales force to acquire new skills and knowledge
and to assume different roles. Accordingly, these changes may lead to outcomes that are not anticipated or
intended and may impact the performance of our sales force and thus
our cost of doing business, employee morale, and/or other performance metrics, all of which could adversely affect our business, financial condition,
operating results and cash flow.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth, for the months indicated, our purchases of common stock in the
third quarter of fiscal year 2007:

Approximate

Total Number

Dollar Value of

of Shares

Shares that

Purchased as

May Yet Be

Total Number

Average

Part of Publicly

Purchased Under

of Shares

Price Paid

Announced Plans

the Plans

Period

Purchased

per Share

or Programs

or Programs

(in thousands, except average price paid per share)

July 1, 2006  July 31, 2006

1,818

$

19.78

1,818

$

407,337

August 1, 2006  August 31, 2006

1,495

21.40

1,495

2,000,000

September 1, 2006  September 30, 2006

41,226

24.00

41,226

1,000,000

Total

44,539

44,539

On June 29, 2006, our Board of Directors authorized a $2 billion common stock repurchase plan for
fiscal year 2007. This authorized stock repurchase plan replaced the prior $600 million common
stock repurchase plan. The Company expects to finance the stock repurchase plan through a
combination of cash on hand and bank financing. The second phase of the stock repurchase plan is
currently being evaluated.

On August 15, 2006, the Company announced the commencement of a $1 billion tender offer to
repurchase outstanding common stock, at a price not less than $22.50 and not greater than $24.50
per share.

On September 14, 2006, the expiration date of the tender offer, CA accepted for purchase 41,225,515
shares at a purchase price of $24.00 per share, for a total price of approximately $989 million,
which excludes bank, legal and other associated charges. Upon completion of the tender offer, the
Company retired all of the shares that were repurchased.

Previously filed as
Exhibit 10.2 to the
Companys Current
Report on Form 8-K
dated August 15,
2006, and
incorporated herein
by reference.

10.9

Amendment No. 1, dated as of
September 1, 2006, to Credit
Agreement dated as of December 2,
2004, among the Company, the Banks
which are parties thereto and
Citicorp North America, Inc., Bank
of America, N.A, and JP Morgan
Chase Bank, N.A., as agents with
respect to a $1 billion Revolving
Loan.

Previously filed as
Exhibit 10.1 to the
Companys Current
Report on Form 8-K
dated September 6,
2006, and
incorporated herein
by reference.

15

Accountants acknowledgement letter.

Filed herewith.

31.1

Certification of the CEO pursuant
to §302 of the Sarbanes-Oxley Act
of 2002.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.

CA, INC.

By:

/s/ John A. Swainson

John A. Swainson

President and Chief Executive Officer

By:

/s/ Nancy E. Cooper

Nancy E. Cooper

Executive Vice President and Chief Financial Officer

Dated: November 3, 2006

61

Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Agreement is entered into by and between CA, Inc. (the Company)
and Kenneth V. Handal (the Employee) September 25, 2006 (the Effective Date) and amends and
restates in its entirety the Employment Agreement between the Company and the Employee, dated as of
July 31, 2006 (the Prior Agreement).

1. Employment, Duties, Authority and Work Standards
. The Company hereby agrees to
continue to employ the Employee as Executive Vice President-Governance, Corporate Secretary, and
Co-General Counsel (along with Amy Fliegelman Olli or such other person as the Board of Directors
of the Company may designate (such person, the Co-General Counsel)) and the Employee hereby
accepts such positions and agrees to serve the Company in such capacities during the Employment
Period (as defined below). The Employee shall report directly to the Companys Chief Executive
Officer. The Employees duties, responsibilities and authority shall be such duties,
responsibilities and authority as are consistent with the above job titles (other than the duties
and responsibilities assigned from time to time to the Co-General Counsel) and as the Chief
Executive Officer shall from time to time specify, in his sole discretion. Such duties shall
initially comprise the position of Corporate Secretary, the oversight of the Internal Audit,
Compliance, and Global Security and Asset Protection Departments. The Employee will (a) serve the
Company (and such of its subsidiary companies as the Company may designate) faithfully, diligently
and to the best of the Employees ability under the direction of the Chief Executive Officer, (b)
devote his full working time and best efforts, attention and energy to the performance of his
duties to the Company and (c) not do anything inconsistent with his duties to the Company.

2. Laws; Other Agreements
. The Employee represents that his employment hereunder
will not violate any law or duty by which he is bound, and will not conflict with or violate any
agreement or instrument to which the Employee is a party or by which he is bound.

3. Compensation
.

(a) In consideration of services that the Employee will render to the Company, the Company
agrees to pay the Employee, during the Employment Period, the sum of $500,000 per annum (less
applicable withholdings) (the Base Salary), payable semi-monthly concurrent with the Companys
normal payroll cycle.

(b) In addition to the Base Salary, during the Employment Period, the Employee shall have an
opportunity to earn an annual cash bonus (Annual Bonus) under the Companys Annual Performance
Bonus program in accordance with Section 4.4 of the Companys 2002 Incentive Plan, as amended and
restated, or any successor thereto (the Incentive Plan); provided that, with respect to the
fiscal year ending March 31, 2007, the Employees Annual Performance Bonus target shall equal
$600,000, provided that such targeted amount and the other terms and conditions of such Annual
Performance Bonus shall be subject to determination and approval of the Compensation and Human
Resource Committee of the Board of Directors (the Compensation Committee) in accordance with the
terms of the Incentive Plan. In respect of the fiscal year ending March 31, 2008, the Companys
Chief Executive Officer (the CEO) shall recommend to the Compensation Committee an Annual
Performance Bonus target for the Employee, in an amount to be determined by the CEO, subject to the
determination and approval of the Compensation Committee in accordance with the terms of the
Incentive Plan.

(c) In addition, the Employee shall also be eligible to receive a targeted Long-Term
Performance Bonus of $2,000,000 for the performance period commencing on April 1, 2006 under the
Companys Long-Term Performance Bonus program as set forth in Section 4.5 of the Incentive Plan,
provided that such targeted amount and the other terms and conditions of such Long-Term Performance
Bonus shall be subject to determination and approval of the Compensation Committee in accordance
with the terms of the Incentive Plan. In respect of the fiscal year ending March 31, 2008, the CEO
shall recommend to the Compensation Committee a

Long-Term Performance Bonus for the Employee, in an
amount to be determined by the CEO, subject to the determination and approval of the Compensation
Committee in accordance with the terms of the Incentive Plan.

4. Benefits and Perquisites.
During the term of the Employees employment, the
Employee shall be eligible to participate in all pension, welfare and benefit plans and perquisites
generally made available to other senior employees of the Company. Additionally, for so long as
the Employee resides in New York City, the Company shall provide a stipend of not less than $5,000
per month for transportation to and from the Companys offices from the Employees residence in the
metropolitan New York area.

Management will also recommend to the Board that the Employee be included as a participant in
the Companys Change in Control Severance Policy (the CIC Severance Policy), provided that such
participation and any other terms and conditions related to such participation shall be at the
discretion of the Board in accordance with the terms of such CIC Severance Policy.

5. Termination; Termination Payments.

(a) Unless the Employees employment shall sooner terminate for any reason pursuant to
paragraph 6 of this Agreement, the Employment Period shall commence on August 1, 2006 and shall
terminate on August 31, 2008. At the end of the Employment Period, subject to the discretion of
the Board of Directors and the Compensation Committee, the Employee may remain with the Company on
such terms and in such position as the Employee and the Company, the Board of Directors and the
Compensation Committee may mutually agree.

(b) In the event that the Employees employment is terminated during the Employment Period (i)
by the Employee for Good Reason (as defined in Appendix A) or (ii) by the Company without Cause (as
defined in Appendix A), other than as a result of the Employees death or disability (within the
meaning of the Companys long-term disability program then in effect), subject to the Employees
execution and delivery of a valid and effective release and waiver in a form satisfactory to the
Company, the Company shall pay the Employee a lump sum cash amount equal to the Employees Base
Salary for the remainder of the Employment Period (i.e., until August 31, 2008).

(c) Notwithstanding anything herein to the contrary, upon the termination of the Employees
employment for any reason, the rights of the Employee with respect to any shares of restricted
stock or options to purchase Common Stock held by the Employee which, as of the Termination Date,
have not been forfeited shall be subject to the applicable rules of the plan or agreement under
which such restricted stock or options were granted as they exist from time to time. In addition,
upon the termination of the Employees employment for any reason, the Company shall pay to the
Employee his Base Salary through the Termination Date, plus any unused vacation time accrued
through the Termination Date. Any vested benefits and other amounts that the Employee is otherwise
entitled to receive under any employee benefit plan, policy, practice or program of the Company or
any of its affiliates shall be payable in accordance with such employee benefit plan, policy,
practice or program as the case may be, provided that the Employee shall not be entitled to receive
any other payments or benefits in the nature of severance or termination pay.

(d) In the event that the Employee resigns other than for Good Reason, is terminated for
Cause, dies or becomes disabled (within the meaning of the Companys long-term disability program
then in effect) during the Employment Period, no benefits shall be payable to the Employee under
paragraph 5(b) of this Agreement, but the terms and conditions of paragraph 5(c) shall remain in
effect.

(e) If the Employee is a participant in the Companys CIC Severance Policy and a
Change in Control occurs, any payments and benefits provided in the CIC Severance Policy that the
Employee is entitled to will reduce (but not below zero) the corresponding payment or benefit
provided under this Agreement. It is the intent of this provision to pay or to provide to the
Employee the greater of the two payments or benefits but not to duplicate them.

6. No Duration of Employment
. Notwithstanding anything else contained in this Agreement
to the contrary, the Company and the Employee each acknowledge and agree that the Employees
employment with the Company may be terminated by either the Company (upon approval of the Companys
Board of Directors) upon 30 days written notice to the Employee

2

(subject
to the provisions of paragraph 5 of this Agreement) or by the Employee upon 60 days written notice to the Company
(subject to the provisions of paragraph 5 of this Agreement), at any time and for any reason, with
or without cause; provided that this Agreement may be terminated for Cause immediately upon written
notice from the Company to the Employee; and

provided further that the Company may determine to waive all or part of the Employees 60
days notice period at its discretion. In addition, this Agreement shall automatically terminate
upon Employees death or disability (determined in accordance with the Companys practices and
policies). Upon termination of the Employees employment for any reason whatsoever, the Company
shall have no further obligations to the Employee other than those set forth in paragraph 5 of this
Agreement. The effective date of the Employees termination of employment shall be referred to
herein as the Termination Date.

7. General
.

(a) Any notice required or permitted to be given under this Agreement shall be made either:

(i) by personal delivery to the Employee or, in the case of the Company, to the Companys
principal office (Principal Office) located at One CA Plaza, Islandia, New York 11749, Attention:
Executive Vice President  Human Resources, or

(ii) in writing and sent by registered mail, postage prepaid, to the Employees residence,
or, in the case of the Company, to the Companys Principal Office.

(b) This Agreement shall be binding upon the Employee and his heirs, executors, assigns, and
administrators and shall inure to the benefit of the Company, its successors and assigns and any
subsidiary or parent of the Company.

(c) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, without regard to conflict of law principles. Any action relating to this Agreement
shall be brought exclusively in the state or federal courts of the State of New York, County of
Suffolk.

(d) This Agreement (which supersedes and replaces the Prior Agreement in its entirety), the
Employment and Confidentiality Agreement executed by the Employee on or about the Effective Date
and the other documents referred to herein represent the entire agreement between the Employee and
the Company related to the Employees employment and supersede any and all previous oral or written
communications, representations or agreements related thereto. This Agreement may only be
modified, in writing, jointly by the Employee and a duly authorized representative of the Company.
This Agreement may be executed in several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument.

(e) The provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single paragraph or sentence) are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable in any respect, and
the validity and enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not in any way be impaired and shall remain enforceable to the fullest
extent permitted by law. In addition, waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver of any other breach
or default, whether similar to or different from the breach or default waived. No waiver of any
provision of this Agreement shall be implied from any course of dealing between the parties hereto
or from any failure by either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.

CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it unless you have read
it carefully and are satisfied that you understand it completely
.

3

CA, INC.

/s/ Kenneth V. Handal 9/25/06

Kenneth V. Handal

By:
Name:

/s/ Andrew Goodman

Andrew Goodman

Title:

Executive Vice President, HR 9/25/06

4

Appendix A

For purposes of this Agreement, Cause means any of the following:

(1) The Employees continued failure, either due to willful action or as a result of gross
neglect, to substantially perform his duties and responsibilities to the Company and its affiliates
(the Group) under this Agreement (other than any such failure resulting from the Employees
incapacity due to physical or mental illness) that, if capable of being cured, has not been cured
within thirty (30) days after written notice is delivered to the Employee, which notice specifies
in reasonable detail the manner in which the Company believes the Employee has not substantially
performed his duties and responsibilities.

(2) The Employees engagement in conduct which is demonstrably and materially injurious to the
Group, or that materially harms the reputation or financial position of the Group, unless the
conduct in question was undertaken in good faith on an informed basis with due care and with a
rational business purpose and based upon the honest belief that such conduct was in the best
interest of the Group.

(3) The Employees indictment or conviction of, or plea of guilty or nolo contendere to, a
felony or any other crime involving dishonesty, fraud or moral turpitude.

(4) The Employees being found liable in any SEC or other civil or criminal securities law
action or entering any cease and desist order with respect to such action (regardless of whether or
not he admits or denies liability).

(5) The Employees breach of his fiduciary duties to the Group which may reasonably be
expected to have a material adverse effect on the Group. However, to the extent the breach is
curable, the Company must give the Employee notice and a reasonable opportunity to cure.

(6) The Employees (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or
impede or (iii) failing to materially cooperate with, any investigation authorized by the Board (an
Investigation). However, the Employees failure to waive attorney-client privilege relating to
communications with his own attorney in connection with an Investigation shall not constitute
Cause.

(7) The Employees withholding, removing, concealing, destroying, altering or by any other
means falsifying any material which is requested in connection with an Investigation.

(8) The Employees disqualification or bar by any governmental or self-regulatory authority
from serving in the capacity contemplated by this Agreement or his loss of any governmental or
self-regulatory license that is reasonably necessary for him to perform his responsibilities to the
Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30
days and (b) during that period the Group uses its good faith efforts to cause the disqualification
or bar to be lifted or the license replaced. While any disqualification, bar or loss continues
during the Employees employment, he will serve in the capacity contemplated by this Agreement to
whatever extent legally permissible and, if his employment is not permissible, he will be placed on
leave (which will be paid to the extent legally permissible).

(9) The Employees unauthorized use or disclosure of confidential or proprietary information,
or related materials, or the violation of any of the terms of the Employment and Confidentiality
Agreement executed by the Employee or any Company standard confidentiality policies and procedures,
which may reasonably be expected to have a material adverse effect on the Group and that, if
capable of being cured, has not been cured within thirty (30) days after written notice is
delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged
unauthorized use or disclosure or violation.

For this definition, no act or omission by the Employee will be willful unless it is made by
the Employee in bad faith or without a reasonable belief that his act or omission was in the best
interests of the Group.

5

For purposes of this Agreement, Good Reason shall mean any of the following:

(1) Any material and adverse change in the Employees title;

(2) Any material and adverse reduction in the Employees authorities or responsibilities other
than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith
and is cured promptly on the Employees giving the Company notice (and for purposes of
clarification, a change in the number of direct reports will not constitute a material and adverse
reduction in the Employees authorities or responsibilities);

(3) Any reduction by the Company in the Employees Base Salary or target level of Annual Bonus
as set forth in Sections 3(a) and (b), respectively, other than any such reduction agreed to by the
Employee in writing;

(4) The Companys material breach of this Agreement;

provided that, no alleged action, reduction or breach set forth in (1) through (4) above (each
an Event) shall be deemed to constitute Good Reason unless such Event remains uncured, as the
case may be, after the expiration of thirty (30) days following delivery to the Company from the
Employee of a written notice, specifying the Event deemed by the Employee to constitute Good
Reason. The Employee acknowledges and agrees that no Event has occurred prior to the date of this
Agreement. The Companys placing the Employee on paid leave for up to 90 consecutive days while it
is determining whether there is a basis to terminate the Employees employment for Cause will not
constitute Good Reason.

1.
Purpose
. The purpose of the Computer
Associates International, Inc. Change in Control Severance Policy (the

Policy
) is to secure the continued services of certain senior executives of the Company
and to ensure their continued dedication to their duties in the event of any threat or occurrence
of a Change in Control (as defined in Section 2).

2.
Definitions
. As used in this Policy, the following terms shall have the respective
meanings set forth below:

(a) 
Annual Performance Bonus
 means the annual cash bonus awarded under the Companys
incentive plan, as in effect from time to time (as of the date of adoption of this Policy the
annual performance bonus within the meaning of Section 4.4 of the Companys 2002 Incentive Plan,
amended and restated effective as of March 31, 2004 (the 
Company Incentive Plan
)).

(b) 
Base Salary
 means the higher of (i) the Participants highest annual rate of
base salary during the twelve-month period immediately prior to the Participants Date of
Termination or (ii) the average of the Participants annual base salary earned during the past
three (3) completed fiscal years of the Company immediately preceding the Participants Date of
Termination (annualized in the event the Participant was not employed by the Company (or its
affiliates) for the whole of any such fiscal year).

(c) 
Board
 means the Board of Directors of the Company and, after a Change in
Control, the board of directors of the Parent Corporation or Surviving Corporation, as the case
may be, as defined for purposes of Section 2(f).

(d) 
Bonus Amount
 means the higher of (i) the Participants target Annual Performance
Bonus for the fiscal year in which the Participants Date of Termination occurs (or if the
Participants Qualifying Termination is on account of Good Reason pursuant to a reduction in a
Participants compensation or compensation opportunity under Section 2(k)(ii), the Participants
target Annual Performance Bonus for the prior fiscal year if higher) or (ii) the average of the
Annual Performance Bonuses earned by the Participant from the Company (or its affiliates) during
the last three (3) completed fiscal years of the Company (or such shorter period of time during
which the Participant was employed by the Company) immediately preceding the Participants Date of
Termination (annualized in the event the Participant was not employed by the Company (or its
affiliates) for the whole of any such fiscal year).

(e) 
Cause
 means (i) the willful and continued failure of the Participant to perform
substantially his duties with the Company (other than any such failure resulting from the
Participants incapacity due to physical or mental illness or any

such failure subsequent to the
Participant being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company)
after a written demand for substantial performance is delivered to the Participant by or on behalf
of the Board which specifically identifies the manner in which the Board believes that the
Participant has not substantially performed his duties, (ii) the willful engaging by the
Participant in illegal conduct or gross misconduct which is demonstrably and materially injurious
to the Company or its affiliates, (iii) the engaging by the Participant in conduct or misconduct
that materially harms the reputation or financial position of the Company, (iv) the Participant (x)
obstructs or impedes, (y) endeavors to influence, obstruct or impede or (z) fails to materially
cooperate with, an Investigation, (v) the Participant withholds, removes, conceals, destroys,
alters or by other means falsifies any material which is requested in connection with an
Investigation, or attempts to do so or solicits another to do so, (vi) the commission of a felony
by the Participant or (vii) the Participant is found liable in any SEC or other civil or criminal
securities law action or enters into any cease and desist orders with respect to such action
regardless of whether the Participant admits or denies liability. For purposes of this paragraph
(d), no act or failure to act by the Participant shall be considered willful unless done or
omitted to be done by the Participant in bad faith and without reasonable belief that the
Participants action or omission was in the best interests of the Company or its affiliates. Any
act, or failure to act, in accordance with authority duly given by the Board, based upon the advice
of counsel for the Company (including counsel employed by the Company) shall be conclusively
presumed to be done, or omitted to be done, by the Participant in good faith and in the best
interests of the Company. Cause shall not exist unless and until the Company has delivered to the
Participant a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board
(excluding the Participant from both the numerator and denominator if the Participant is a Board
member) at a meeting of the Board called and held for such purpose (after reasonable notice to the
Participant and an opportunity for the Participant, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth in clauses (i),
(ii), (iii), (iv), (v), (vi) or (vii) has occurred and specifying the particulars thereof in
detail.

(f) 
Change in Control
 means the occurrence of any one of the following events:

(i) individuals who, on the effective date of the Policy, constitute the Board (the

Incumbent Directors
) cease for any reason to constitute at least a majority of
the Board,
provided
that any person becoming a director subsequent to the effective
date of the Policy whose election or nomination for election was approved by a vote of a
majority of the Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall be an Incumbent Director;
provided
,
however
, that no individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election contest with
respect to directors or as a result of any other actual or threatened solicitation of

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proxies or consents by or on behalf of any person other than the Board shall be deemed
to be an Incumbent Director;

(ii) any person (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the 
Exchange Act
) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Companys then outstanding
securities eligible to vote generally in the election of directors (the 
Company Voting
Securities
);
provided
,
however
, that the event described in this
paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the
following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (C) by
any underwriter temporarily holding securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii)), (E) pursuant
to any acquisition by the Participant or any group of persons including the Participant (or
any entity controlled by the Participant or any group of persons including the
Participant); or (F) a transaction (other than one described in (iii) below) in which
Company Voting Securities are acquired from the Company, if a majority of the Incumbent
Directors approve a resolution providing expressly that the acquisition pursuant to this
clause (F) does not constitute a Change in Control under this paragraph (ii);

(iii) the consummation of a merger, consolidation, statutory share exchange,
reorganization, sale of all or substantially all the Companys assets or similar form of
corporate transaction involving the Company or any of its Subsidiaries that requires the
approval of the Companys stockholders, whether for such transaction or the issuance of
securities in the transaction (a 
Business Combination
), unless immediately
following such Business Combination: (A) at least 60% of the total voting power of (x)
the corporation resulting from such Business Combination (the 
Surviving
Corporation
), or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of at least 95% of the voting securities eligible to
elect directors of the Surviving Corporation (the 
Parent Corporation
), is
represented by Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which such Company
Voting Securities were converted pursuant to such Business Combination), and such voting
power among the holders thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit plan (or related
trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is
or becomes the beneficial owner, directly or indirectly, of 35% or more of the total voting
power of the outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is

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no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Boards approval of the execution
of the initial agreement providing for such Business Combination (any Business Combination
which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to
be a 
Non-Qualifying Transaction
 and any Business Combination which does not
satisfy all of the criteria specified in (A) (B) and (C) shall be deemed a 
Qualifying
Transaction
); or

(iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because
any person acquires beneficial ownership of more than 35% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company or its affiliates which
reduces the number of Company Voting Securities outstanding;
provided
, that if after the
consummation of such acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
For purposes of this Change in Control definition, corporation shall include any limited
liability company, partnership, association, business trust and similar organization, board of
directors shall refer to the ultimate governing body of such organization and director shall
refer to any member of such governing body.

(g)

Company
 means Computer Associates
International, Inc.

(h) 
Date of Termination
 means (i) the effective date on which the Participants
employment by the Company terminates as specified in a prior written notice by the Company or the
Participant, as the case may be, to the other, delivered pursuant to Section 9 or (ii) if the
Participants employment by the Company terminates by reason of death, the date of death of the
Participant.

(i) 
Disability
 shall mean long-term disability under the terms of Companys
long-term disability plan, as then in effect.

(j) 
Equity Incentive Compensation
 means all equity-based compensation (including
stock options and restricted stock) awarded under the Companys incentive plan, as in effect from
time to time (as of the date of adoption of this Policy the restricted stock, stock options and
other equity-based awards within the meaning of Sections 4.5, 4.6 and 4.7, respectively, of the
Company Incentive Plan).

(k) 
Good Reason
 means, without the Participants express written consent, the
occurrence of any of the following events after a Change in Control:

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(i) (A) any change in the duties, responsibilities or status (including reporting
responsibilities) of the Participant that is inconsistent in any material and adverse
respect with the Participants position(s), duties, responsibilities or status with the
Company immediately prior to such Change in Control (including any material and adverse
diminution of such duties or responsibilities);
provided
,
however
, that
Good Reason shall not be deemed to occur upon a change in duties, responsibilities (other
than reporting responsibilities) or status that is solely and directly a result of the
Company no longer being a publicly traded entity and does not involve any other event set
forth in this Section 2(k) or (B) a material and adverse change in the Participants titles
or offices (including, if applicable, membership on the Board) with the Company as in
effect immediately prior to such Change in Control;

(ii) a more than 10% reduction by the Company in the Participants rate of annual base
salary or Annual Performance Bonus, Long-Term Performance Bonus or Equity Incentive
Compensation target opportunities (including any material and adverse change in the formula
for such targets) as in effect immediately prior to such Change in Control;

(iii) the failure of the Company to (A) continue in effect any significant employee
benefit plan, compensation plan, welfare benefit plan or material fringe benefit plan in
which the Participant is participating immediately prior to such Change in Control or the
taking of any action by the Company which would adversely affect the Participants
participation in or materially reduce the Participants benefits under any such plan,
unless the Participant is permitted to participate in other plans providing the Participant
with substantially equivalent benefits in the aggregate (at substantially equivalent or
lower cost with respect to welfare benefit plans), or (B) provide the Participant with paid
vacation in accordance with the most favorable vacation policies of the Company as in
effect for the Participant immediately prior to such Change in Control (including the
crediting of all service for which the Participant had been credited under such vacation
policies prior to the Change in Control); or

(iv) the failure of the Company to obtain the assumption of the Companys obligations
hereunder from any successor as contemplated in Section 8(b).

An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by
the Company within ten (10) days after receipt of notice thereof given by the Participant shall not
constitute Good Reason. The Participants right to terminate employment for Good Reason shall not
be affected by the Participants incapacities due to mental or physical illness and the
Participants continued employment shall not constitute consent to, or a waiver of rights with
respect to, any event or condition constituting Good Reason.

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(l) 
Home Country
 shall mean a Participants country of residence immediately before
the Participant commenced employment with the Company.

(m) 
Investigation
 means an investigation authorized by the Board, a self-regulatory
organization empowered with self-regulatory responsibilities under federal or state laws or a
governmental department or agency.

(n) 
Long-Term Performance Bonus
 means the long-term bonus awarded under the
Companys incentive plan, as in effect from time to time (as of the date of adoption of this Policy
the long-term performance bonus within the meaning of Section 4.5 of the Company Incentive Plan).

(o) 
Participant
 means each of the senior executives of the Company who are selected
by the Board for coverage by this Policy and identified on Schedules A, B and C from time to time.

(p) 
Potential Change in Control
 means the execution or entering into of any
agreement by the Company the consummation of which can be expected to be a Qualifying Transaction.

(q) 
Qualifying Termination
 means a termination of the Participants employment (i)
by the Company other than for Cause or (ii) by the Participant for Good Reason. Termination of the
Participants employment on account of death, Disability or Retirement shall not be treated as a
Qualifying Termination. Notwithstanding the preceding sentence, the death of the Participant after
notice of termination for Good Reason or without Cause has been validly provided shall be deemed to
be a Qualifying Termination.

(r) 
Retirement
 means the Participants mandatory retirement (not including any
mandatory early retirement) in accordance with the Companys retirement policy generally applicable
to its salaried employees, as in effect immediately prior to the Change in Control, or in
accordance with any retirement arrangement established with respect to the Participant with the
Participants written consent.

(s) 
Subsidiary
 means any corporation or other entity in which the Company has a
direct or indirect ownership interest of 50% or more of the total combined voting power of the then
outstanding securities or interests of such corporation or other entity entitled to vote generally
in the election of directors (or members of any similar governing body) or in which the Company has
the right to receive 50% or more of the distribution of profits or 50% of the assets or liquidation
or dissolution.

(t) 
Termination Period
 means the period of time beginning with a Change in Control
and ending two (2) years following such Change in Control. Notwithstanding anything in this Policy
to the contrary, if (i) the Participants employment is terminated prior to a Change in Control
(or, if applicable, a Potential Change of Control) for reasons that would have constituted a
Qualifying Termination if

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they had occurred following a Change in Control; (ii) the Participant reasonably demonstrates
that such termination (or Good Reason event) was at the request of a third party who had indicated
an intention or taken steps reasonably calculated to effect a Change in Control; and (iii) a Change
in Control (or a Potential Change in Control) involving such third party (or a party competing with
such third party to effectuate a Change in Control) does occur within six (6) months from the date
of such termination (or, in the case of a Potential Change in Control, such Potential Change in
Control occurs within three (3) months of such termination), then for purposes of this Policy, the
date immediately prior to the date of such termination of employment or event constituting Good
Reason shall be treated as a Change in Control. For purposes of determining the
timing
of
payments and benefits to the Participant under Section 4, the date of the actual Change in Control
(or, if applicable, the Potential Change of Control) shall be treated as the Participants Date of
Termination under Section 2(h), and for purposes of determining the
amount
of payments and
benefits owed to the Participant under Section 4, the date the Participants employment is actually
terminated shall be treated as the Participants Date of Termination under Section 2(h).

3.
Eligibility
. The Board shall determine in its sole discretion which senior
executives of the Company shall be Participants and whether a Participant shall be listed on
Schedule A, B or C, and the Board may remove the name of any senior executive from Schedule A, B or
C and participation in this Policy at any time in its sole discretion;
provided
,
however
, that a Participant may not be removed from Schedule A, B or C without his or her
prior written consent within the two-year period after a Change in Control or within the period of
time beginning on a date three (3) months prior to a Potential Change in Control and ending on the
termination of the agreement that constituted the Potential Change in Control. The Board may
delegate its authority to identify the Participants on Schedule A, B or C and to remove a
Participant from Schedule A, B or C to the Compensation and Human Resource Committee (or any
successor committee) of the Board.

4.
Payments Upon Termination of Employment
. If during the Termination Period the
employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to
the Participants execution of a Separation Agreement and Release in the form attached to this
Policy as Exhibit A (the 
Separation Agreement and Release
), the Company shall provide to
the Participant:

(a) within ten (10) days following the Date of Termination (or, if later, the execution by the
Participant of the Separation Agreement and Release), a lump sum cash payment equal to the result
of multiplying (i) the sum of (A) the Participants Base Salary, plus (B) the Participants Bonus
Amount by (ii) either 2.99 for a Participant identified on Schedule A, or 2.00 for a Participant
identified on Schedule B or 1.00 for a Participant identified on Schedule C; and

(b) within ten (10) days following the Date of Termination (or, if later, the execution by the
Participant of the Separation Agreement and Release), a cash

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payment equal to the Participants target Annual Performance Bonus for the fiscal year in
which the Participants Date of Termination occurs, multiplied by a fraction the numerator of which
shall be the number of days the Participant was employed by the Company during the fiscal year in
which the Date of Termination occurred and the denominator of which is 365; and

(c) within ten (10) days following the Date of Termination (or, if later, the execution by the
Participant of the Separation Agreement and Release), a cash payment equal to the Participants
target Long-Term Performance Bonus for any incomplete performance cycle(s) as of the Participants
Date of Termination, multiplied by a fraction the numerator of which shall be the number of days
the Participant was employed by the Company during the applicable performance cycle and the
denominator of which shall be the total number of days in the performance cycle; and

(d) within ten (10) days following the Date of Termination (or, if later, the execution by the
Participant of the Separation Agreement and Release), a cash payment equal to the Companys monthly
premium cost of health care for Participant and/or the Participants family at the Date of
Termination, multiplied by eighteen (18); and

(e) for a period of one (1) year following the Participants Date of Termination, the Company
shall make outplacement services available to the Participant in accordance with its outplacement
policy in effect immediately before the Change in Control (or if no such policy is in effect, the
Participant may choose a provider of outplacement services,
provided
that the total cost of
such outplacement services for the Participant shall not exceed $10,000 USD); and

(f) if on the Date of Termination the Participant is working in a country other than the
Participants Home Country and the Participant wishes to relocate to such Participants Home
Country within one (1) year following the Date of Termination, the Company shall provide relocation
benefits to the Participant and his or her dependants in accordance with the Companys relocation
program as in effect immediately before the Change in Control (or if no such program is in effect,
the Company shall reimburse the Participant for reasonable relocation benefits incurred by the
Participant and his or her dependants in returning to the Participants Home Country to the extent
that such costs do not exceed $75,000 USD); and

(g) to the extent provided in Appendix A, if the Participant is subject to the excise tax
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the 
Excise
Tax
), a gross-up payment in accordance with the provisions of Appendix A.

Except as otherwise expressly provided pursuant to this Policy, this Policy shall be construed
and administered in a manner which avoids duplication of compensation and benefits which may be
provided under any other plan, program, policy, or other

-8-

arrangement or individual contract. In the event a Participant is covered by any other plan,
program, policy, individually negotiated agreement or other arrangement, in effect as of his or her
Date of Termination, that may duplicate the payments and benefits provided for in this Section 4,
the Board is specifically empowered to reduce or eliminate the duplicative benefits provided for
under the Policy.

5.
Withholding Taxes
. The Company may withhold from all payments due to the
Participant (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state,
local or other law, the Company is required to withhold therefrom.

6.
Reimbursement of Expenses
. Except as provided in Section 16(a) of a Participants
Employment and Confidentiality Agreement, if any contest or dispute shall arise under this Policy
involving termination of a Participants employment with the Company or involving the failure or
refusal of the Company to perform fully in accordance with the terms hereof, the Company shall
reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if
any, incurred by the Participant in connection with such contest or dispute (regardless of the
result thereof), together with interest in an amount equal to the prime rate as reported in
The
Wall Street Journal
, but in no event higher than the maximum legal rate permissible under
applicable law, such interest to accrue thirty (30) days from the date the Company receives the
Participants statement for such fees and expenses through the date of payment thereof, regardless
of whether or not the Participants claim is upheld by a court of competent jurisdiction or an
arbitration panel;
provided
,
however
, that the Participant shall be required to
repay immediately any such amounts to the Company to the extent that a court or an arbitration
panel issues a final and non-appealable order setting forth the determination that the position
taken by the Participant was frivolous or advanced by the Participant in bad faith.

7.
Scope of Policy
. Nothing in this Policy shall be deemed to entitle the Participant
to continued employment with the Company or its Subsidiaries, and if a Participants employment
with the Company shall terminate prior to a Change in Control, the Participant shall have no
further rights under this Policy (except as otherwise provided hereunder);
provided
,
however
, that any termination of a Participants employment during the Termination Period
shall be subject to all of the provisions of this Policy.

8.
Successors; Binding Agreement
.

(a) This Policy shall not be terminated by any Business Combination. In the event of any
Business Combination, the provisions of this Policy shall be binding upon the Surviving
Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

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(b) The Company agrees that in connection with any Business Combination, it will cause any
successor entity to the Company unconditionally to assume all of the obligations of the Company
hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such
Business Combination that constitutes a Change in Control, shall be a breach of this Policy and
shall constitute Good Reason hereunder and shall entitle the Participant to compensation and other
benefits from the Company in the same amount and on the same terms as the Participant would be
entitled hereunder if the Participants employment were terminated following a Change in Control by
reason of a Qualifying Termination. For purposes of implementing the foregoing, the date on which
any such Business Combination becomes effective shall be deemed the date Good Reason occurs, and
shall be the Date of Termination if requested by a Participant.

(c) The benefits provided under this Policy shall inure to the benefit of and be enforceable
by the Participants personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would
be payable to the Participant hereunder had the Participant continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this Policy to such
person or persons appointed in writing by the Participant to receive such amounts or, if no person
is so appointed, to the Participants estate.

9.
Notice
. (a) For purposes of this Policy, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have been duly given
when delivered or five (5) days after deposit in the United States mail, certified and return
receipt requested, postage prepaid, addressed as follows:

If to the Participant: the address listed as the Participants address in
the Companys personnel files.

or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

(b) A written notice of the Participants Date of Termination by the Company or the
Participant, as the case may be, to the other, shall (i) indicate the specific termination
provision in this Policy relied upon, (ii) to the extent applicable, set forth in

-10-

reasonable detail the facts and circumstances claimed to provide a basis for termination of
the Participants employment under the provision so indicated and (iii) specify the termination
date (which date shall be not less than fifteen (15) nor more than sixty (60) days after the giving
of such notice). The failure by the Participant or the Company to set forth in such notice any
fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any
right of the Participant or the Company hereunder or preclude the Participant or the Company from
asserting such fact or circumstance in enforcing the Participants or the Companys rights
hereunder.

10.
Full Settlement; Resolution of Disputes and Costs
.

(a) The Companys obligation to make any payments provided for in this Policy and otherwise to
perform its obligations hereunder shall be in lieu and in full settlement of all other severance
payments to the Participant under any other severance or employment agreement between the
Participant and the Company, and any severance plan of the Company. In no event shall the
Participant be obligated to seek other employment or take other action by way of mitigation of the
amounts payable to the Participant under any of the provisions of this Policy and, except as
provided in the Separation Agreement and Release, such amounts shall not be reduced whether or not
the Participant obtains other employment.

(b) Any dispute or controversy arising under or in connection with this Policy shall be
settled exclusively by arbitration in New York by three arbitrators in accordance with the
commercial arbitration rules of the American Arbitration Association (
AAA
) then in
effect. One arbitrator shall be selected by the Company, the other by the Participant and the
third jointly by these arbitrators (or if they are unable to agree within thirty (30) days of the
commencement of arbitration the third arbitrator will be appointed by the AAA). Judgment may be
entered on the arbitrators award in any court having jurisdiction. In the event of any such
dispute or controversy arising during a Termination Period, the Company shall bear all costs and
expenses arising in connection with any arbitration proceeding on the same terms as set forth in
Section 6 of this Policy. Notwithstanding anything in this Policy to the contrary, any court,
tribunal or arbitration panel that adjudicates any dispute, controversy or claim arising between a
Participant and the Company, or any of their delegates or successors, in respect of a Participants
Qualifying Termination, will apply a
de
novo
standard of review to any
determinations made by such person. Such
de
novo
standard shall apply
notwithstanding the grant of full discretion hereunder to any such person or characterization of
any such decision by such person as final, binding or conclusive on any party.

11.
Employment with Subsidiaries
. Employment with the Company for purposes of this
Policy shall include employment with any Subsidiary.

12.
Survival
. The respective obligations and benefits afforded to the Company and the
Participant as provided in Sections 4 (to the extent that payments or

-11-

benefits are owed as a result of a termination of employment that occurs during the term of
this Policy) 5, 6, 8(c) and 10 shall survive the termination of this Policy.

13.
GOVERNING LAW; VALIDITY
. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
POLICY SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS, AND APPLICABLE FEDERAL
LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS POLICY SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS POLICY, WHICH OTHER PROVISIONS SHALL
REMAIN IN FULL FORCE AND EFFECT.

14.
Amendment and Termination
. The Board may amend or terminate the Policy at any
time;
provided
,
however
, that during the period commencing on a Change in Control
and ending on the second anniversary of the Change in Control, the Policy may not be amended or
terminated by the Board in any manner which is materially adverse to the interests of any
Participant then listed on Schedule A, B or C without the prior written consent of such
Participant;
provided
,
further
, that any termination or amendments to the Policy
that are adverse to the interests of any Participant then listed on Schedule A, B or C, and that
occur during the period of time beginning on a date three (3) months prior to a Potential Change in
Control and ending on the termination of the agreement that constituted the Potential Change in
Control, shall be void.

15.
Interpretation and Administration
. The Policy shall be administered by the Board.
The Board may delegate any of its powers under the Policy to the Compensation and Human Resource
Committee of the Board (or any successor committee). The Board or the Compensation and Human
Resource Committee (or any successor committee) shall have the authority (i) to exercise all of the
powers granted to it under the Policy, (ii) to construe, interpret and implement the Policy, (iii)
to prescribe, amend and rescind rules and regulations relating to the Policy, (iv) to make all
determinations necessary or advisable in administration of the Policy and (v) to correct any
defect, supply any omission and reconcile any inconsistency in the Policy. Actions of the Board or
the Compensation and Human Resource Committee (or any successor committee) shall be taken by a
majority vote of its members.

16.
Claims and Appeals
. Participants may submit claims for benefits by giving notice
to the Company pursuant to Section 9 of this Policy. If a Participant believes that he or she has
not received coverage or benefits to which he or she is entitled under the Policy, the Participant
may notify the Board in writing of a claim for coverage or benefits. If the claim for coverage or
benefits is denied in whole or in part, the Board shall notify the applicant in writing of such
denial within thirty (30) days (which may be extended to sixty (60) days under special
circumstances), with such notice setting forth: (i) the specific reasons for the denial; (ii) the
Policy provisions upon which the denial is

-12-

based; (iii) any additional material or information necessary for the applicant to perfect his
or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a
claim by the Board, the Participant may: (i) request a review of the denial by the Board or, where
review authority has been so delegated, by such other person or entity as may be designated by the
Board for this purpose; (ii) review any Policy documents relevant to his or her claim; and (iii)
submit issues and comments to the Board or its delegate that are relevant to the review. Any
request for review must be made in writing and received by the Board or its delegate within sixty
(60) days of the date the applicant received notice of the initial denial, unless special
circumstances require an extension of time for processing. The Board or its delegate will make a
written ruling on the applicants request for review setting forth the reasons for the decision and
the Policy provisions upon which the denial, if appropriate, is based. This written ruling shall
be made within thirty (30) days of the date the Board or its delegate receives the applicants
request for review unless special circumstances require an extension of time for processing, in
which case a decision will be rendered as soon as possible, but not later than sixty (60) days
after receipt of the request for review. All extensions of time permitted by this Section 16 will
be permitted at the sole discretion of the Board or its delegate. If the Board does not provide
the Participant with written notice of the denial of his or her appeal, the Participants claim
shall be deemed denied.

17.
Type of Policy
. This Policy is intended to be, and shall be interpreted as an
unfunded employee welfare plan under Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended (ERISA) and Section 2520.104-24 of the Department of Labor Regulations,
maintained primarily for the purpose of providing employee welfare benefits, to the extent that it
provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a plan that is unfunded
and maintained primarily for the purpose of providing deferred compensation, to the extent that it
provides such compensation, in each case for a select group of management or highly compensated
employees.

18.
Nonassignability
. Benefits under the Policy may not be assigned by the
Participant. The terms and conditions of the Policy shall be binding on the successors and assigns
of the Company.

19.
Effective Date
. The Policy shall be effective as of October 18, 2004.

(a) Anything in this Policy to the contrary notwithstanding, in the event it shall be
determined that any payment, award, benefit or distribution (or any acceleration of any payment,
award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of
the Participant (whether pursuant to the terms of this Policy or otherwise, but determined without
regard to any additional payments required under this Appendix A) (the 
Payments
) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the 
Code
), or any interest or penalties are incurred by the Participant with respect to
such excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the 
Excise Tax
), then the Company shall pay to the
Participant an additional payment (a 
Reimbursement Payment
) in an amount such that after
payment by the Participant of all taxes (including any Excise Tax) imposed upon the Reimbursement
Payment, the Participant retains an amount of the Reimbursement Payment equal to the Excise Tax
imposed upon the Payments. For purposes of determining the amount of the Reimbursement Payment,
the Participant shall be deemed to (i) pay federal income taxes at the highest marginal rates of
federal income taxation for the calendar year in which the Reimbursement Payment is to be made and
(ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the
calendar year in which the Reimbursement Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and local taxes.

Notwithstanding the foregoing provisions of this Appendix A, if it shall be determined that
the Participant is entitled to a Reimbursement Payment, but that the Payments would not be subject
to the Excise Tax if the Payments were reduced by an amount that is no more than 10% of the portion
of the Payments that would be treated as parachute payments under Section 280G of the Code, then
the amounts payable to the Participant under this Policy shall be reduced (but not below zero) to
the maximum amount that could be paid to the Participant without giving rise to the Excise Tax (the

Safe Harbor Cap
), and no Reimbursement Payment shall be made to the Participant. The
reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the
payments under Section 4(a), unless an alternative method of reduction is elected by the
Participant. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable
under this Policy (and no other Payments) shall be reduced. If the reduction of the amounts
payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no
amounts payable under this Policy shall be reduced pursuant to this provision.

(b) Subject to the provisions of Paragraph (a), all determinations required to be made under
this Appendix A, including whether and when a Reimbursement Payment is required, the amount of such
Reimbursement Payment, the amount of any Option Redetermination (as defined below), the reduction
of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such
determinations, shall be made by a public accounting firm that is retained by the Company as of the
date immediately prior to the Change in Control (the 
Accounting Firm
) which shall provide
detailed supporting calculations both to the Company and the Participant within fifteen (15)
business days of the receipt of notice from the Company or the Participant that there has been a
Payment, or such earlier time as is requested by the Company (collectively, the

Determination
). For the avoidance of doubt, the Accounting Firm may use the Option
Redetermination amount in determining the reduction of the Payments to the Safe Harbor Cap.
Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in
Control that the Accounting Firm is precluded from performing such services under applicable
auditor independence rules or (ii) the Audit Committee of the Board determines that it does not
want the Accounting Firm to perform such services because of auditor independence concerns or (iii)
the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in
Control, the Board shall appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by
the Company, and the Company shall enter into any agreement reasonably requested by the Accounting
Firm in connection with the performance of the services hereunder. The Reimbursement Payment under
this Appendix A with respect to any Payments shall be made no later than thirty (30) days following
such Payment. If the Accounting Firm determines that no Excise Tax is payable by a Participant, it
shall furnish the Participant with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on the Participants applicable federal income tax return will
not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm
determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish the
Participant with a written opinion to such effect. The Determination by the Accounting Firm shall
be binding upon the Company and the Participant.

As a result of the uncertainty in the application of Section 4999 of the Code at the time of
the Determination, it is possible that Reimbursement Payments which will not have been made by the
Company should have been made (
Underpayment
) or Reimbursement Payments are made by the
Company which should not have been made (
Overpayment
), consistent with the calculations
required to be made hereunder. In the event the amount of the Reimbursement Payment is less than
the amount necessary to reimburse the Participant for the Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
Company to or for the benefit of the Participant. In the event the amount of the Reimbursement
Payment exceeds the amount necessary to reimburse the Participant

A-2

for the Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has
been made and any such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by the Participant (to the extent the Participant
has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service)
to or for the benefit of the Company. The Participant shall cooperate, to the extent his or her
expenses are reimbursed by the Company, with any reasonable requests by the Company in connection
with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
In the event that the Company makes a Reimbursement Payment to the Participant and subsequently the
Company determines that the value of any accelerated vesting of stock options held by the
Participant shall be redetermined within the context of Treasury Regulation §1.280G-1 Q/A 33 (the

Option Redetermination
), the Participant shall (i) file with the Internal Revenue Service
an amended federal income tax return that claims a refund of the overpayment of the Excise Tax
attributable to such Option Redetermination and (ii) promptly pay the refunded Excise Tax to the
Company;
provided
that the Company shall pay all reasonable professional fees incurred in
the preparation of the Participants amended federal income tax return. If the Option
Redetermination occurs in the same year that the Reimbursement Payment is included in the
Participants taxable income, then in addition to returning the refund to the Company, the
Participant will also promptly return to the Company any tax benefit realized by the return of such
refund and the return of the additional tax benefit payment (all determinations pursuant to this
sentence shall be made by the Accounting Firm). In the event that amounts payable to the
Participant under this Policy were reduced pursuant to the second paragraph of Paragraph (a) and
subsequently the Participant determines there has been an Option Redetermination that reduces the
value of the Payments attributable to such options, the Company shall promptly pay to the
Participant any amounts payable under this Policy that were not previously paid solely as a result
of the second paragraph of Paragraph (a) up to the Safe Harbor Cap.

1. Executives employment with the Company will terminate effective
[Date]
.

2. Executive agrees to make himself reasonably available to the Company to respond to requests
by the Company for information concerning litigation, regulatory inquiry or investigation,
involving facts or events relating to the Company that may be within his knowledge. Executive will
cooperate fully with the Company in connection with any and all future litigation or regulatory
proceedings brought by or against the Company to the extent the Company reasonably deems
Executives cooperation necessary. Executive will be entitled to reimbursement of reasonable
out-of-pocket expenses (not including counsel fees) incurred in connection with fulfilling his
obligations under this Section 2.

3. In consideration of Executives undertakings herein, the Company will pay an amount equal
to $
in accordance with Section 4 of the Companys Change in Control Severance Policy
(the CIC Severance Policy), less required deductions (including, but not limited to, federal,
state and local tax withholdings) as separation/severance pay (the Severance Payment). The
Severance Payment will be paid in accordance with the CIC Severance Policy. Payment of the
Severance Payment is contingent upon the execution of this Agreement by Executive and Executives
compliance with all terms and conditions of this Agreement and the CIC Severance Policy. Executive
agrees that if this Agreement does not become effective, the Company shall not be required to make
any further payments to Executive pursuant to this Agreement or the CIC Severance Policy and shall
be entitled to recover all payments already made by it (including interest thereon).

4. Executive understands and agrees that any amounts that Executive owes the Company,
including any salary or other overpayments related to Executives employment with the Company, will
be offset and deducted from Executives final paycheck from the Company. Executive specifically
authorizes the Company to offset and deduct any such amounts from his final paycheck. Executive
agrees and acknowledges that, to the extent the amount of Executives final paycheck is not
sufficient to repay the full amount that Executive owes to the Company, if any, the full remaining
amount owed to the Company, if any, will be offset and deducted from the amount of the Severance
Payment. Executive specifically authorizes the Company to offset and deduct any such amounts from
his Severance Payment.

5. Executive agrees that, after payment of Executives final paycheck on
[Date]
and the
Severance Payment, Executive will have received all compensation and benefits that are due and
owing to Executive by the Company, including but not limited to salary, vacation pay, bonus,
commissions and incentive/override compensation but excluding any benefits or services provided
pursuant to Sections 4(e) and 4(f) of the CIC Severance Policy.

6. Executive represents that he has returned to the Company all property or information,
including, without limitation, all reports, files, memos, plans, lists, or other records (whether
electronically stored or not) belonging to the Company or its affiliates, including copies,
extracts or other documents derived from such property or information. Executive will immediately
forfeit all rights and benefits under this Agreement and the CIC Severance Policy, including,
without limitation, the right to receive any Severance Payment if Executive, directly or
indirectly, at any time (i) discloses to any third party or entity any trade secrets or other
proprietary or confidential information pertaining to the Company or any of its affiliates or uses
such secrets or information without the prior written consent of the General Counsel of the Company
or (ii) takes any actions or makes or publishes any statements, written or oral, or instigates,
assists or participates in the making or publication of any such statements which libel, slander or
disparage the Company or any of its past or present directors, officers or employees. Nothing in
this Agreement shall prevent or prohibit Executive or the Company from responding to an order,
subpoena, other legal process or regulatory inquiry directed to them or from providing information
to or making a filing with a governmental or regulatory body. Executive agrees that upon learning
of any order, subpoena or other legal process seeking information that would otherwise be
prohibited from disclosure under this Agreement, he will promptly notify the Company, in writing,
directed to the Companys General Counsel. In the event disclosure is so required, Executive
agrees not to oppose any action by the Company to seek or obtain a protective order or other
appropriate remedy.

7. Executive agrees that Executives Employment and Confidentiality Agreement (the Employment
and Confidentiality Agreement) shall continue to be in full force and effect, including but not
limited to all non-competition and non-solicitation provisions contained therein.

8. Executive hereby represents that he has not filed any action, complaint, charge, grievance
or arbitration against the Company or any of its affiliates in connection with any matters
relating, directly or indirectly, to his employment, and covenants and agrees not to file any such
action, complaint or arbitration or commence any other judicial or arbitral proceedings against the
Company or any of its affiliates with respect to events occurring prior to the termination of his
employment with the Company or any affiliates thereof.

9. Effective on
[Date]
, the Company will cease all health benefit coverage and other benefit
coverage for Executive.

Ex-2

10.
GENERAL RELEASE
 Effective as of the Effective Date, and in return for the
consideration set forth above, Executive agrees not to sue or file any action, claim, or lawsuit
against the Company, agrees not to pursue, seek to recover or recover any alleged damages, seek to
obtain or obtain any other form of relief or remedy with respect to, and cause the dismissal or
withdrawal of, any lawsuit, action, claim, or charge against the Company, and Executive agrees to
waive all claims and release and forever discharge the Company, its officers, directors,
subsidiaries, affiliates, parents, attorneys, shareholders and employees from any claims, demands,
actions, causes of action or liabilities for compensatory damages or any other relief or remedy,
and obligations of any kind or nature whatsoever, based on any matter, cause or thing, relating in
any way, directly or indirectly, to his employment, from the beginning of time through the
Effective Date of this Agreement, whether known or unknown, fixed or contingent, liquidated or
unliquidated, and whether arising from tort, statute, or contract, including, but not limited to,
any claims arising under or pursuant to the California Fair Employment and Housing Act, Title VII
of the Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the
Americans with Disabilities Act, the Rehabilitation Act, the Family and Medical Leave Act of 1993,
the Occupational Safety & Health Act, the Employee Retirement Income Security Act of 1974, the
Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Notification
Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act of 1967 (ADEA), New
York State Labor Law, New York State Human Rights Law, New York Human Rights Law, and any other
state, federal, city, county or local statute, rule, regulation, ordinance or order, or the
national or local law of any foreign country, any claim for future consideration for employment
with the Company, any claims for attorneys fees and costs and any employment rights or entitlement
law, and any claims for wrongful discharge, intentional infliction of emotional distress,
defamation, libel or slander, payment of wages, outrageous behavior, breach of contract or any duty
allegedly owed to Executive, discrimination based upon race, color, ethnicity, sex, age, national
origin, religion, disability, sexual orientation, or another unlawful criterion or circumstance,
and any other theory of recovery. It is the intention of the parties to make this release as broad
and as general as the law permits.

[
Executive acknowledges that he is aware of, has read, has had explained to him by his
attorneys, understands and expressly waives any and all rights he has or may have under Section
1542 of the California Civil Code, which provides as follows:

A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.
]
*

*

Include bracketed language for California
employees.

Ex-3

11. Executive acknowledges that he may later discover facts different from or in addition to
those which he knows or believes to be true now, and he agrees that, in such event, this Agreement
shall nevertheless remain effective in all respects, notwithstanding such different or additional
facts or the discovery of those facts.

12. This Agreement may not be introduced in any legal or administrative proceeding, or other
similar forum, except one concerning a breach of this Agreement or the CIC Severance Policy.

13. Executive acknowledges that Executive has made an independent investigation of the facts,
and does not rely on any statement or representation of the Company in entering into this
Agreement, other than those set forth herein.

14. Executive agrees that, without limiting the Companys remedies, should he commence,
continue, join in, or in any other manner attempt to assert any claim released in connection
herewith, or otherwise violate in a material fashion any of the terms of this Agreement, the
Company shall not be required to make any further payments to the Executive pursuant to this
Agreement or the CIC Severance Policy and shall be entitled to recover all payments already made by
it (including interest thereon), in addition to all damages, attorneys fees and costs the Company
incurs in connection with Executives breach of this Agreement. Executive further agrees that the
Company shall be entitled to the repayments and recovery of damages described above without waiver
of or prejudice to the release granted by him in connection with this Agreement, and that his
violation or breach of any provision of this Agreement shall forever release and discharge the
Company from the performance of its obligations arising from the Agreement.

15. Executive has been advised and acknowledges that he has been given forty-five (45) days to
consider signing this Agreement, he has seven (7) days following his signing of this Agreement to
revoke and cancel the terms and conditions contained herein, and the terms and conditions of this
Agreement shall not become effective or enforceable. until the revocation period has expired (the
Effective Date).

16. Executive acknowledges that Executive has been advised hereby to consult with, and has
consulted with, an attorney of his choice prior to signing this Agreement.

17. Executive acknowledges that Executive has fully read this Agreement, understands the
contents of this Agreement, and agrees to its terms and conditions of his own free will, knowingly
and voluntarily, and without any duress or coercion.

18. Executive understands that this Agreement includes a final general release, and that
Executive can make no further claims against the Company or the persons listed in Section 10 of
this Agreement relating in any way, directly or indirectly, to his employment. Executive also
understands that this Agreement precludes Executive from recovering any damages or other relief as
a result of any lawsuit, grievance, charge or

Ex-4

claim brought on Executives behalf against the Company or the persons listed in Section 10 of
this Agreement.

19. Executive acknowledges that Executive is receiving adequate consideration (that is in
addition to what Executive is otherwise entitled to) for signing this Agreement.

20. This Agreement and the CIC Severance Policy constitute the complete understanding between
Executive and the Company regarding the subject matter hereof and thereof. No other promises or
agreements regarding the subject matter hereof and thereof will be binding unless signed by
Executive and the Company.

21. Executive and the Company agree that all notices or other communications required or
permitted to be given under the terms of this Agreement shall be given in accordance with Section
9 of the CIC Severance Policy.

22. Executive and the Company agree that any disputes relating to any matters covered under
the terms of this Agreement shall be resolved in accordance with Section 10 of the CIC Severance
Policy.

23. By entering into this Agreement, the Company does not admit and specifically denies any
liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly
understood and agreed that this Agreement is being entered into solely for the purpose of amicably
resolving all matters of any kind whatsoever between Executive and the Company.

24. In the event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement
shall be unaffected thereby and shall remain in full force and effect to the fullest extent
permitted by law.

25. The respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary for the intended preservation of such rights
and obligations.

26. Unless expressly specified elsewhere in this Agreement, this Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of New York without
reference to the principles of conflict of law.

Ex-5

27. This Agreement may be executed in one or more counterparts.

Company

Executive

By:

Date:

Date:

Ex-6

Exhibit 10.5

SEPARATION AGREEMENT AND GENERAL CLAIMS RELEASE

CA, Inc., on behalf of itself and its parents, subsidiaries, other affiliated legal entities,
divisions, successors and assigns in or outside the United States (hereinafter collectively
referred to as the Company) and I Robert W. Davis agree as follows:

1. I acknowledge that the Company advised me to read this agreement (the Agreement) and carefully
consider all of its terms before signing it. I further acknowledge that:

(a)

The Company gave me 21 calendar days to consider this Agreement. To the
extent I deemed appropriate, I took advantage of this period before signing the
Agreement;

(b)

The Company advised me in writing to discuss this Agreement with my attorney
(at my own expense) before signing it, and I decided to seek legal advice or not seek
legal advice to the extent I deemed appropriate;

(c)

I carefully read this Agreement; I fully understand it; and I am entering
into it knowingly and voluntarily; and

(d)

I understand that the waiver and release contained in this Agreement does not
apply to any rights or claims that may arise after the date that I execute the
Agreement.

2. I understand that I may revoke this Agreement within seven (7) days after I sign it by providing
written notice on or before the seventh (7
th
) day after signing this Agreement to Andrew
Goodman, Executive Vice President of Human Resources, located at One CA Plaza, Islandia, New York,
11749. I understand and agree that this Agreement will not become effective, and the Company will
not provide me any of the consideration described in paragraph 3 below, until the seven (7) day
revocation period has expired.

3. My employment with the Company ended as of July 31, 2006. In exchange for my full acceptance of
the terms of this Agreement, the Company agrees to pay me the following consideration:

(a) the sum of 525,000 DOLLARS and NO CENTS as a separation payment (Separation Payment);
and

I understand that if I wish to continue
my medical insurance coverage pursuant to COBRA I must elect COBRA coverage (by
following the procedure set forth in the COBRA notice that I will receive from
ADP for making such an election) within the timeframes specified in the COBRA
notice. I further understand that my signature on this agreement is
NOT
a COBRA election.

1

I understand and agree that the Company will make normal withholdings from the Separation Payment
and COBRA Assistance Payment, including for federal, state and local taxes. I further understand
that the combined amount of the Separation Payment and COBRA Assistance Payment will be made in one
lump sum payable on the first full payroll cycle following the effectiveness of this Agreement.

4. To the greatest extent permitted by law, I release the Company and its present and former
officers, directors, employees and agents from any and all known or unknown claims and obligations
of any nature and kind, in law, equity or otherwise, arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the date I execute this
Agreement. The claims I am waiving and releasing under this Agreement include, but are not limited
to, any claims and demands that directly or indirectly arise out of or are in any way connected to
my employment with the Company, the Employment Agreement dated February 1, 2005 between me and the
Company (Employment Agreement) (other than liability to make the payments and provide the
benefits contemplated by the Employment Agreement, which liability I hereby acknowledge will have
been satisfied in full upon the prompt payment of the amounts set forth in Section 3(a) of this
Agreement) or the Companys termination of my employment; any claims or demands related to salary,
bonuses, commissions, stock, stock options, or any other ownership interest in the Company; and,
any claims under Title VII of the Civil Rights Acts of 1964, the Age Discrimination in Employment
Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor
Standards Act and any other federal law, state law, local law, country law, common law, or any
other statute, regulation, or law of any type. I also waive any right to any remedy that has been
or may be obtained from the Company through the efforts of any other person or any government
agency.

5. I understand and agree that the waiver and release of claims contained in paragraph 4 of this
Agreement shall not apply to any of the following:

a.

Any rights I may have to continued health or dental benefits under a
Company-sponsored benefit plan. Any such benefits shall be governed by the terms
of the specific benefit plan under which such benefits are provided;

b.

Any rights I may have pertaining to the exercise of vested stock
options that I may have under a stock option plan administered by the Company.
Any such vested options will be governed by the terms of the stock option plan
(and any amendments thereto) under which such options were granted;

c.

Any rights I may have related to payment for accrued but unused
vacation as of the Termination Date;

2

d.

Any rights I may have under the Consolidated Omnibus Budget
Reconciliation Act (COBRA);

e.

Any rights I may have related to vested monies that I may have within
the Companys 401(k) plan;

f.

Any rights I may have related to monies that I may have within the
Companys Employee Stock Purchase Plan;

g.

Any claim I may have to reimbursement of business-related expenses
that I incurred while performing my job for the Company. Such amounts will be
paid if deemed owing in accordance with Company policy; and

h.

Any rights I may have to payments under this Agreement.

6. I acknowledge that, in the absence of my execution of this Agreement, the Company is under no
obligation to make the payments or provide the benefits being provided to me pursuant to paragraph
3 of this Agreement, and that the Company will do so only subject to my agreement to, and
compliance with, the terms of this Agreement.

7. I understand and agree that this Agreement is not an admission of guilt or wrongdoing by the
Company, and I will make no statement to the contrary. I acknowledge that the Company does not
believe or admit that it has done anything wrong.

8. I certify that I have complied with the provisions of the Employment and Confidentiality
Agreement (or similar agreement) that I signed when I began working for the Company (the Employee
Agreement) and that I have not done or in any way been a party to, or knowingly permitted, any of
the following;

a.

disclosure of any confidential matters or trade secrets of the
Company;

b.

retention of any confidential materials (including product and
marketing information, development documents or materials, drawings, or other
intellectual property) created or used by me or others during my employment;

c.

copying any of the above; and,

d.

retention of any materials or personal property (including any
documents or other written materials, or any items of computer or other hardware,
or any software) belonging to, or in the possession of the Company.

3

The provisions of this paragraph 8 and those of paragraph 9 below shall not be construed to apply
to communications with attorneys for the Company or with my personal attorneys.

9. I understand and agree that I have a continuing obligation to preserve as confidential (and not
to reveal to anyone or use, for myself or anyone else) any trade secret, know-how or confidential
information created or learned by me during my employment with the Company. By signing this
Agreement, I confirm my promise to perform each and every one of the obligations that I undertook
in the Employee Agreement. I expressly confirm that I know of no reason why any promise or
obligation set forth in the Employee Agreement should not be fully enforceable against me. I
understand that the terms of the Employee Agreement are incorporated into this Agreement by
reference.

10. Following termination of my employment, (i) I will not, and will not encourage or induce others
to, in any manner, directly or indirectly, make or publish any statement (orally or in writing)
that would libel, slander, or disparage the Company, any of its affiliates or any of their
employees, officers or directors and (ii) the Company agrees that it will not authorize any
employee or any employee of its subsidiaries or its affiliates or encourage or induce others to,
and that it will instruct its executive officers and directors not to, in any manner directly or
indirectly, make or publish any statement (orally or in writing) that would libel, slander or
disparage me. Libel and slander shall have the meanings ascribed to them by law under which
this Agreement shall be governed and construed. For the purposes of this Agreement, the term
disparage includes, without limitation, comments or statements to the press and/or media, the
other party to this Agreement, or any individual or entity with whom the other party to this
Agreement has a business relationship, which would adversely affect in any manner (i) the conduct
of the business of the other party to this Agreement (including, without limitation, any business
plans or prospects) or (ii) the business reputation of the other party to this Agreement. Nothing
in this paragraph shall preclude me or the Company or any of its employees from giving truthful
testimony under oath in response to a subpoena or other lawful process or truthful answers in
response to questions from a government investigator or as otherwise required by law.

11. I agree that if a court of law determines that I have breached a promise that I make under this
Agreement that I will be obligated to pay the reasonable attorneys fees and any damages the
Company may incur as a result of or related to such breach. I acknowledge that any actual or
threatened violation of Paragraphs 8 or 9 would irreparably harm the Company, and that the Company
will be entitled to an injunction (without the need to post any bond) prohibiting me from
committing any such violation.

12. This Agreement and the Employee Agreement contain the entire agreement between me and the
Company regarding the subjects addressed herein, and may be amended only by a writing signed by
myself and the Companys Executive Vice President of Human Resources. I acknowledge that the
Company has made no

4

representations or promises to me other than those in this Agreement. If any one or more of the
provisions of this Agreement is determined to be illegal or unenforceable for any reason, such
provision or other portion thereof will be modified or deleted in such manner as to make this
Agreement, as modified, legal and enforceable to the fullest extent permitted under applicable law.

13. I agree that if I am notified that any claim has been filed against me or the Company that
relates to my employment with the Company, I will provide prompt written notice of the same to the
Company, and shall cooperate fully with the Company in resolving any such claim. Further, I agree
that I will make myself reasonably available to the Companys representatives in connection with
any and all claims, disputes, negotiations, investigations, lawsuits or administrative proceedings
relating to my tenure with the Company. I further agree that I will provide the Company with any
information and/or documentation in my possession or control that it may request in connection with
any and all claims, disputes, negotiations, investigations, lawsuits or administrative proceedings
related to my tenure with the Company. I further agree that if requested to do so by the Company,
I will provide declarations or statements to the Company, will meet with attorneys or other
representatives of the Company, and will prepare for and give depositions or testimony on behalf of
the Company relating to any claims, disputes, negotiations, investigations, lawsuits or
administrative proceedings related to my tenure with the Company. I understand and agree that to
the extent my compliance with the terms of this paragraph 13 requires me to travel or otherwise
incur expenses, the Company will reimburse me for any such reasonable expenses that I incur.
Finally, I understand that subject to and in accordance with applicable law and the Company By-laws
as in effect from time to time during my employment or as amended in accordance with such Company
By-laws, the Company agrees to indemnify me with respect to any action, suit or proceeding to which
I am made or threatened to be made a party that arises out of my good faith performance of my job
responsibilities as Chief Financial Officer of the Company or my status as an officer, employee or
agent of the Company.

14. This Agreement binds my heirs, administrators, representatives, executors, successors, and
assigns, and will inure to the benefit of the Company.

15. This Agreement shall be governed by and, for all purposes, construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed in such state. The
federal or state courts of the State of New York shall have sole and exclusive jurisdiction over
any claim or cause of action relating to this Agreement, my employment with the Company, or my
separation from the Company. I will accept service of process as provided under New York law or by
registered mail, return receipt requested, and waive any objection to personal jurisdiction over me
in the state or federal courts of the State of New York.

IN WITNESS WHEREFORE, the Company has caused this instrument to be executed in its corporate name,
by an individual with full authorization to act on its behalf. Further, I

5

sign my name and enter this Agreement on behalf of myself, my legal representatives, executors,
heirs and assigns.

EMPLOYEE

BY:

/s/ Robert W. Davis

EMPLOYEE SIGNATURE

9/15/06

DATE

Sworn and subscribed before me this the 15 day of September,
2006.

By:

/s/ Janice C. Alber

Notary Public

NOTARIAL STAMP OR SEAL

CA, INC.

BY:

/s/ Andrew Goodman

ANDREW GOODMAN

EXECUTIVE VICE PRESIDENT  HUMAN RESOURCES

DATE:

9/15/06

6

Exhibit 10.6

EMPLOYMENT AGREEMENT

This Agreement is entered into by and between CA, Inc. (the Company) and Amy Fliegelman
Olli (the Employee) as of the date that it has been duly executed by both parties, provided
that the. Employee commences employment under the terms of this Agreement on or around September
13, 2006 as is mutually agreed by the parties (such first date of employment being referred to
herein as the Effective Date).

1. Employment, Duties, Authority and Work Standards
. The Company hereby agrees to
employ the Employee on the Effective Date as Executive Vice President and Co-General Counsel and
the Employee hereby accepts such positions and agrees to serve the Company in such capacities
during the Employment Period (as defined below). The Employee shall report directly to the
Companys Chief Executive Officer. The Employees duties, responsibilities and authority shall be
such duties, responsibilities and authority as are consistent with the above job titles and such
other duties, responsibilities and authority as the Chief Executive Officer shall from time to time
specify commensurate with her position. Such duties shall include responsibility for all legal
matters and the worldwide legal department, provided however, that while the current General
Counsel remains with the Company, duties associated with oversight of internal audit department,
corporate compliance and the role of corporate secretary are excluded. The Employee will (a) serve
the Company (and such of its subsidiary companies as the Company may designate) faithfully,
diligently and to the best of the Employees ability under the direction of the Chief Executive
Officer, (b) devote her full working time and best efforts, attention and energy to the performance
of her duties to the Company and (c) not do anything inconsistent with her duties to the Company.

2. Laws; Other Agreements
. The Employee represents that her employment hereunder
will not violate any law or duty by which she is bound, and will not conflict with or violate any
agreement or instrument to which the Employee is a party or by which she is bound.

3. Sign-On Bonus
. The Company shall pay the Employee a cash payment equal to
$185,000 (the Sign-On Bonus) in the following manner. The Company shall pay the Sign-On Bonus no
later than the first scheduled payroll date after the first 30 days of the Employment Period.
Notwithstanding the foregoing, in the event that the Employee is terminated for Cause or resigns
without Good Reason prior to the first anniversary of the Effective Date, the Employee shall be
obligated to immediately repay to the Company the Sign-On Bonus paid to her.

4. Compensation
.

(a) In consideration of services that the Employee will render to the Company, the Company
agrees to pay the Employee, during the Employment Period, the sum of $450,000 per annum (the Base
Salary), payable semi-monthly concurrent with the Companys normal payroll cycle.

(b) In addition to the Base Salary, during the Employment Period, the Employee shall have an
opportunity to earn an annual cash bonus (Annual Bonus) under the Companys Annual Performance
Bonus program in accordance with Section 4.4 of the Companys 2002 Incentive Plan, as amended and
restated, or any successor thereto (the Incentive Plan); provided that, with respect to the
fiscal year ending March 31, 2007, the Employees Annual Performance Bonus target shall equal
$400,000, provided that such targeted amount and the other terms and conditions of such Annual
Performance Bonus shall be subject to determination and approval of the Compensation and Human
Resource Committee of the Board of Directors (the Compensation Committee) in accordance with the
terms of the Incentive Plan.

(c) In addition, the Employee shall also be eligible to receive a targeted Long-Term
Performance Bonus of $1,000,000 for the performance period commencing on April 1, 2006 under the
Companys Long-Term Performance Bonus program as set forth in Section 4.5 of the Incentive Plan,
provided that such targeted amount and the other terms and conditions of such Long-Term Performance
Bonus shall be subject to determination and approval of the Compensation Committee in accordance
with the terms of the Incentive Plan.

(d) Subject to applicable law, management will recommend that, following the Effective Date,
the Employee will be granted an award of 15,000 restricted shares of the

Companys Common Stock (Restricted Stock), subject to restrictions on transferability as set
forth in the Incentive Plan and the Restricted Stock grant agreement provided to the Employee.
Such Restricted Stock grant agreement shall provide that the restrictions applicable to the
Restricted Stock shall lapse in three (3) relatively equal annual installments commencing on the
first anniversary of the date of grant, provided the Employee remains employed through each such
anniversary.

(e) All payments to the Employee shall be subject to applicable tax withholding.

5. Benefits and Perquisites.
During the term of the Employees employment, the
Employee shall be eligible to participate in all pension, welfare and benefit plans and perquisites
generally made available to other senior employees of the Company. Additionally, for so long as
the Employee resides more than 100 miles outside of Islandia, NY, the Company shall provide a
stipend of not less than $5,000 per month for transportation to and from the Companys offices from
the Employees residence. Additionally, while in Islandia, NY, the Employee will be provided with
corporate housing in accordance with the Companys policy for at least 12 months following the
Effective Date (the Company may, in its discretion, continue such corporate housing on an annual
basis thereafter).

Management will also recommend to the Board that the Employee be included as a Schedule B
participant in the Companys Change in Control Severance Policy (the CIC Severance Policy),
provided that such participation and any other terms and conditions related to such participation
shall be at the discretion of the Board in accordance with the terms of such CIC Severance Policy.

6. Termination; Termination Payments.

(a) Unless the Employees employment shall sooner terminate for any reason pursuant to
paragraph 7 of this Agreement, the Employment Period shall commence on the Effective Date and
shall initially terminate on September 30, 2009, except that beginning on September 30, 2009 and
each September 30 thereafter, the Employment Period will automatically extend for one year unless
either the Employee or the Company gives at least 60 days advanced written notice of
non-extension.

(b) In the event that the Employees employment is terminated during the Employment Period (i)
by the Employee for Good Reason (as defined in Appendix A) or (ii) by the Company without Cause (as
defined in Appendix A), other than as a result of the Employees death or disability (within the
meaning of the Companys long-term disability program then in effect), subject to the Employees
execution and delivery of a valid and effective release and waiver in a form satisfactory to the
Company, the Company shall pay the Employee a lump sum cash amount equal to one (1) times
Employees Base Salary.

(c) Notwithstanding anything herein to the contrary, upon the termination of the Employees
employment for any reason, the rights of the Employee with respect to any shares of restricted
stock or options to purchase Common Stock held by the Employee which, as of the Termination Date,
have not been forfeited shall be subject to the applicable rules of the plan or agreement under
which such restricted stock or options were granted as they exist from time to time. In addition,
upon the termination of the Employees employment for any reason, the Company shall pay to the
Employee her Base Salary through the Termination Date, plus any unused vacation time accrued
through the Termination Date. Any vested benefits and other amounts that the Employee is otherwise
entitled to receive under any employee benefit plan, policy, practice or program of the Company or
any of its affiliates shall be payable in accordance with such employee benefit plan, policy,
practice or program as the case may be, provided that the Employee shall not be entitled to receive
any other payments or benefits in the nature of severance or termination pay.

(d) In the event that the Employee resigns other than for Good Reason, is terminated for
Cause, dies or becomes disabled (within the meaning of the Companys long-term disability program
then in effect) during the Employment Period, no benefits shall be payable to the Employee under
paragraph 6(b) of this Agreement, but the terms and conditions of paragraph 6(c) shall remain in
effect.

(e) If the Employee is a participant in the Companys CIC Severance Policy and a
Change in Control occurs, any payments and benefits provided in the CIC Severance Policy that the
Employee is entitled to will reduce (but not below zero) the corresponding payment or

2

benefit provided under this Agreement. It is the intent of this provision to pay or to
provide to the Employee the greater of the two payments or benefits but not to duplicate them.

7. No Duration of Employment
. Notwithstanding anything else contained in this Agreement
to the contrary, the Company and the Employee each acknowledge and agree that the Employees
employment with the Company may be terminated by either the Company upon 30 days written notice to
the Employee (subject to the provisions of paragraph 6 of this Agreement) or by the Employee upon
60 days written notice to the Company (subject to the provisions of paragraph 6 of this
Agreement), at any time and for any reason, with or without cause; provided that this Agreement may
be terminated for Cause immediately upon written notice from the Company to the Employee; and
provided further that the Company may determine to waive all or part of the Employees 60 days
notice period at its discretion. In addition, this Agreement shall automatically terminate upon
Employees death or disability (determined in accordance with the Companys practices and
policies). Upon termination of the Employees employment for any reason whatsoever, the Company
shall have no further obligations to the Employee other than those set forth in paragraph 6 of this
Agreement. The effective date of the Employees termination of employment shall be referred to
herein as the Termination Date.

8. General
.

(a) Any notice required or permitted to be given under this Agreement shall be made either:

(i) by personal delivery to the Employee or, in the case of the Company, to the Companys
principal office (Principal Office) located at One CA Plaza, Islandia, New York 11749, Attention:
Executive Vice President  Human Resources, or

(ii) in writing and sent by registered mail, postage prepaid, to the Employees residence,
or, in the case of the Company, to the Companys Principal Office.

(b) This Agreement shall be binding upon the Employee and her heirs, executors, assigns, and
administrators and shall inure to the benefit of the Company, its successors and assigns and any
subsidiary or parent of the Company.

(c) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, without regard to conflict of law principles. Any action relating to this Agreement
shall be brought exclusively in the state or federal courts of the State of New York, County of
Suffolk.

(d) This Agreement, the Employment and Confidentiality Agreement executed by the Employee on
or about the Effective Date and the other documents referred to herein represent the entire
agreement between the Employee and the Company related to the Employees employment and supersede
any and all previous oral or written communications, representations or agreements related thereto.
This Agreement may only be modified, in writing, jointly by the Employee and a duly authorized
representative of the Company. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same instrument.
However, this Agreement will not be effective until the date it has been executed by both parties.

(e) The provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single paragraph or sentence) are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable in any respect, and
the validity and enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not in any way be impaired and shall remain enforceable to the fullest
extent permitted by law. In addition, waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver of any other breach
or default, whether similar to or different from the breach or default waived. No waiver of any
provision of this Agreement shall be implied from any course of dealing between the parties hereto
or from any failure by either party hereto to assert its or her rights hereunder on any occasion or
series of occasions.

3

CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it unless you have read
it carefully and are satisfied that you understand it completely
.

CA, INC.

/s/ Amy Fliegelman Olli

By:

/s/ Andrew Goodman

Amy Fliegelman Olli

Name:

Andrew Goodman

Title:

Executive Vice President, HR

Date: August 22, 2006

Date:

August 17, 2006

4

Appendix A

For purposes of this Agreement, Cause means any of the following:

(1) The Employees continued failure, either due to willful action or as a result of gross
neglect, to substantially perform her duties and responsibilities to the Company and its affiliates
(the Group) under this Agreement (other than any such failure resulting from the Employees
incapacity due to physical or mental illness) that, if capable of being cured, has not been cured
within thirty (30) days after written notice is delivered to the Employee, which notice specifies
in reasonable detail the manner in which the Company believes the Employee has not substantially
performed her duties and responsibilities.

(2) The Employees engagement in conduct which is demonstrably and materially injurious to the
Group, or that materially harms the reputation or financial position of the Group, unless the
conduct in question was undertaken in good faith on an informed basis with due care and with a
rational business purpose and based upon the honest belief that such conduct was in the best
interest of the Group.

(3) The Employees indictment or conviction of, or plea of guilty or nolo contendere to, a
felony or any other crime involving dishonesty, fraud or moral turpitude.

(4) The Employees being found liable in any SEC or other civil or criminal securities law
action or entering any cease and desist order with respect to such action (regardless of whether or
not she admits or denies liability).

(5) The Employees breach of her fiduciary duties to the Group which may reasonably be
expected to have a material adverse effect on the Group. However, to the extent the breach is
curable, the Company must give the Employee notice and a reasonable opportunity to cure.

(6) The Employees (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or
impede or (iii) failing to materially cooperate with, any investigation authorized by the Board (an
Investigation). However, the Employees failure to waive attorney-client privilege relating to
communications with her own attorney in connection with an Investigation shall not constitute
Cause.

(7) The Employees withholding, removing, concealing, destroying, altering or by any other
means falsifying any material which is requested in connection with an Investigation.

(8) The Employees disqualification or bar by any governmental or self-regulatory authority
from serving in the capacity contemplated by this Agreement or her loss of any governmental or
self-regulatory license that is reasonably necessary for her to perform her responsibilities to the
Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30
days and (b) during that period the Group uses its good faith efforts to cause the disqualification
or bar to be lifted or the license replaced. While any disqualification, bar or loss continues
during the Employees employment, she will serve in the capacity contemplated by this Agreement to
whatever extent legally permissible and, if her employment is not permissible, she will be placed
on leave (which will be paid to the extent legally permissible).

(9) The Employees unauthorized use or disclosure of confidential or proprietary information,
or related materials, or the violation of any of the terms of the Employment and Confidentiality
Agreement executed by the Employee or any Company standard confidentiality policies and procedures,
which may reasonably be expected to have a material adverse effect on the Group and that, if
capable of being cured, has not been cured within thirty (30) days after written notice is
delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged
unauthorized use or disclosure or violation.

For this definition, no act or omission by the Employee will be willful unless it is made by
the Employee in bad faith or without a reasonable belief that her act or omission was in the best
interests of the Group.

5

For purposes of this Agreement, Good Reason shall mean any of the following:

(1) Any material and adverse change in the Employees title;

(2) Any material and adverse reduction in the Employees authorities or responsibilities other
than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith
and is cured promptly on the Employees giving the Company notice (and for purposes of
clarification, a change in the number of direct reports will not constitute a material and adverse
reduction in the Employees authorities or responsibilities);

(3) Any reduction by the Company in the Employees Base Salary or target level of Annual Bonus
as set forth in Sections 4(a) and (b), respectively, other than any such reduction agreed to by the
Employee in writing;

(4) The Companys material breach of this Agreement;

provided that, no alleged action, reduction or breach set forth in (1) through (4) above shall
be deemed to constitute Good Reason unless such action, reduction or breach remains uncured, as
the case may be, after the expiration of thirty (30) days following delivery to the Company from
the Employee of a written notice, setting forth such course of conduct deemed by the Employee to
constitute Good Reason. The Companys placing the Employee on paid leave for up to 90 consecutive
days while it is determining whether there is a basis to terminate the Employees employment for
Cause will not constitute Good Reason.

With respect to the subject registration statements, we acknowledge our awareness of the use
therein of our report dated November 3, 2006 related to our review of interim financial
information. As discussed in Note A to the consolidated condensed financial statements, the
Company has restated the consolidated condensed statements of operations for the three-month and
six-month periods ended September 30, 2005 and the consolidated condensed statement of cash flows
for the six-month period ended September 30, 2005 to reflect the effects of certain prior period
restatements that were previously disclosed in Note 12 of the consolidated financial statements in
the Companys Form 10-K for the fiscal year ended March 31, 2006.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part
of a registration statement prepared or certified by an independent registered public accounting
firm, or a report prepared or certified by an independent registered public accounting firm within
the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP
New York, New York

Exhibit 31.1

CEO CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John A. Swainson, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of CA, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;

4.

The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;

(b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;

(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and

(d) Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting; and

5.

The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):

(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal control over financial reporting.

Date: November 3, 2006

/s/ John A. Swainson

John A. Swainson
President and Chief Executive Officer

Exhibit 31.2

CFO CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nancy E. Cooper, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of CA, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;

4.

The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;

(b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;

(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and

(d) Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting; and

5.

The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):

(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal control over financial reporting.

In connection with the Quarterly Report on Form 10-Q of CA, Inc., a Delaware corporation (the
Company), for the fiscal quarter ended September 30, 2006 as filed with the Securities and
Exchange Commission (the Report), each of John A. Swainson, President and Chief Executive Officer
of the Company, and Nancy E. Cooper, Executive Vice President and Chief Financial Officer of the
Company, hereby certifies, pursuant to §906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350),
that to his or her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.

/s/ John A. Swainson

John A. Swainson
President and Chief Executive Officer
November 3, 2006

The foregoing certification will not be deemed filed for purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liability of that Section. The foregoing
certification will not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates it by reference.